BY JEFF E. SCHAPIRO

Times-Dispatch Staff Writer

Foes of payday lending say new restrictions on money stores don't go far enough in protecting Virginians and will drive up the cost of borrowing.

"It's like having an automobile with a speedometer but no brakes," said Frank Berrey of AARP, the seniors-advocacy organization.

AARP, the Virginia Interfaith Center for Public Policy, the Virginia Poverty Law Center and the Virginia Organizing Project held a news conference yesterday to spotlight what they view as the bill's weaknesses.

Gov. Timothy M. Kaine is expected to sign into law by next week hard-fought legislation from the 2008 General Assembly clamping down on the high-cost, instant-loan industry.

An industry spokesman, Jamie Fulmer of Advance America, said the new law could complicate borrowing, making loans less attractive and potentially put lenders out of business.

"No doubt there are some in the industry who won't survive," said Fulmer. "We're clearly not certain what the future holds with regard to this."

In a deal with lenders and their opponents, Kaine -- once a critic of cash stores -- has promised not to push for additional restrictions.

"Sometimes you get what you can get," said Kaine press secretary Gordon Hickey. "It was the best under the circumstances."

According to AARP and the other advocacy organizations, the legislation's shortcomings include higher costs for borrowers.

The total cost of a typical loan of $500 for two weeks could rise sharply from current levels.

However, the bill limits borrowers to one loan at a time and no more than five over six months -- features that Kaine says can protect Virginians from becoming mired in debt.

Presently, a borrower would pay $15 per $100 for a total of $75 on a $500 loan. But the new fee structure would push the price to about $112.

Here's how: Lenders would impose a 20 percent flat fee -- that would be $100 on $500 -- plus a $5 administrative fee. Interest would be limited to 36 percent-- roughly $1.40 per $100, or $7 on $500.

The new law would not take effect until January 2009. That's to give the state time to set up a computer database with which to track borrowing and enforce restrictions on the frequency of loans.

Contact Jeff E. Schapiro at jschapiro @timesdispatch.com.