Car Title News
The latest news on car title loans, auto title loans and the car title lending industry from the Center for Responsible Lending.
- GOP Seeks Data on What Prompted CFPB Auto Guidance
American Banker 24 Jun 2013
House Republicans, including 27 members of the Financial Services Committee, sent a letter dated June 20 to the Consumer Financial Protection Bureau (CFPB) expressing concern...
- Clay Places Moratorium on Payday Licenses
Trussville Tribune (Ala.) 07 May 2013
City councilors in Clay, Ala., have put a freeze on licensing for payday loan, auto title loan, and check-cashing establishments. The resolution stresses the city's opposition to any business deemed as detrimental to the health, safety, or welfare of its residents...
- Guest Column: Arizona Must Do More to Keep Predatory Car-Title Lending in Check
Arizona Daily Star 30 Apr 2013
More than 1.2 million Arizona voters rejected Proposition 200, which would have permanently legalized 300 percent annual percentage rate payday loans in the state. Since that pivotal 2008 ballot initiative, lenders have made other attempts to circumvent the state's consumer-loan laws, only to be rejected in the Legislature. Lenders are turning to auto title lending as another way to engage in high-cost financing,...
- Senators Seek to Cap Interest Rates on Consumer Loans
The Hill 09 Apr 2013
Senate Majority Whip Dick Durbin (D-Ill.) and several other Democratic colleagues have proposed a bill to set an interest rate and fee limit of 36 percent for all open- and closed-end consumer credit transactions...
- Title Loans Hurt Poor, Critics Say
Arizona Republic 31 Mar 2013
Although Arizona voters rejected payday lending in 2008, auto title lending grew in its place; and there now are about 600 licensed title lending branches statewide, according to Department of Financial Institutions data. The product may be attractive to borrowers with bad credit, little savings, and a lack of family resources...
- Competing Title Pawn Bills Emerge in Alabama Legislature
Anniston Star 17 Mar 2013
Rod Scott, a Democratic state legislator from Birmingham, says he often hears from consumers in need of help because of an auto title loan. This type of loan is illegal in more than half of U.S. states, but is common in Alabama...
- Ala. House Panel OKs Bill Regulating Title Loans
CBS42.com 14 Mar 2013
Auto title lenders, which use ownership of a borrower's personal vehicle as collateral for a short-term advance, will continue to do business in Alabama under legislation passed by state lawmakers. However, the Alabama Title Loan Act will now subject the industry to regulation. The measure was passed by a House subcommittee on March 13 and now moves to the full House for debate. Critics are displeased because the bill fails to address what they say are excessive interest rates imposed by title lenders.
- Short-Term Loan Debate Comes Back to House
New Hampshire Union Leader 28 Feb 2013
In New Hampshire, supporters of House Bill 562 say the proposal's cap on interest rates for auto title loans would aid some of the state's most vulnerable citizens. If passed, it would restrict annual interest on short-term auto title loans to 36 percent, after a law passed last year repealed the limit. Without the ceiling, interest rates on the short-term loans could reach the triple digits in New Hampshire. For example, LoanMax charges 24.99 percent per month for 30-day loans, which is equal to about 300 percent annually. Industry representatives say the products provide a financial alternative to bank loans, and that auto title lenders provide jobs and access to cash. House Commerce and Consumer Affairs Chairman Ed Butler (D-Harts Location), however, says that such loans trap consumers in a cycle of debt and put their vehicles at risk of repossession. Many church organizations have spoken in favor of SB 562 as well, saying it can help fight usury.
- NH Bill Would Reduce Cap on Title Loans
Nashua Telegraph (NH) 27 Feb 2013
Legislators in New Hampshire are looking to further limit borrowing costs on car title loans in the state. A proposal sponsored by House Commerce Chairman Ed Butler (D-Harts Location) would allow title lenders to charge no more than 36 percent in annual interest. The bill essentially would reverse a Republican measure that last year gave the industry the power to impose rates of up to 25 percent a month, which is equivalent to an APR of about 300 percent. Butler says that amount puts cash-strapped consumers in jeopardy of losing title to their personal transportation.
- City Lists Rules for Payday Lenders But Wants Lawmakers to Act
Houston Chronicle 05 Feb 2013
Proposed restrictions on payday and auto title lenders in Houston have garnered mild industry support and disappointment from consumer advocates who say the rules do not go far enough. City leaders say they will hold off on a vote on the proposal until they know if the state Legislature plans to act on payday lending during its current session. The local proposal would cap payday loans at 35 percent of the borrower's gross monthly income for single-payment deals. In the case of multiple-payment loans, each installment would be capped at 25 percent of monthly income. Auto title loans would not be allowed to exceed 6 percent of gross annual income or 70 percent of the car's value, whichever is less. Refinancing on multiple-payment loans would be banned. Critics say that allowing unlimited installments on multiple-payment deals is troubling, since such a deal could contain the fees associated with 10 to 12 rollovers of a typical single-payment deal. "The payday lenders are not likely to sue on this ordinance because it really doesn't hurt very much," according to Mark Wawro of Texas Appleseed. "It doesn't address the cycle of debt. We want to see real change." Activists prefer the models adopted by Dallas and other cities, which limit the number of installments in multiple-payment deals, require a reduction of the principal loan amount by 25 percent with each refinancing, allow for fewer refinancings, and set the caps lower.
- Judge Dismisses Payday Lenders’ Lawsuit Against City of Dallas
Dallas Morning News (TX) 05 Feb 2013
District Judge Eric Moye has tossed out a lawsuit that had been filed against the city of Dallas in an effort to undermine its control over payday and auto title lenders. The dismissal means that the city can keep regulating where payday lenders operate, how they issue loans, and what they charge in interest and fees. Supporters of Dallas' strict payday-lending ordinance called the ruling a victory for poor communities. It “really solidifies the city’s right to regulate these businesses in their own jurisdiction,” said Rev. Gerald Britt of the non-profit CitySquare. It also implications for several other jurisdictions in Texas that have adopted payday lending rules, including Austin, San Antonio, and El Paso. The Consumer Service Alliance of Texas originally filed the suit and can appeal the ruling. But Britt said that, hopefully, payday lenders "really should be more interested in negotiating some sort of reasonable legislation now."
- Bryan, CS Join Cities Calling for Regulations on Payday, Auto Loan Lenders
The Eagle (TX) 08 Jan 2013
Texas cities Bryan and College Station are asking state legislators to help push back against payday and auto title lenders. Thirteen such businesses operate in the Bryan-College Station area, according to the Office of Consumer Credit Commissioner. There is currently a debate about whether lenders should be regulated like banks or credit unions. The United Way of The Brazos Valley says the short-term lenders have a detrimental effect on middle- and low-income families. Of nearly 14,000 local payday loan transactions that took place between January and June 2012, borrowers paid $1.3 million in fees; about 75 percent of borrowers refinanced; and 101 vehicles were repossessed. Alison Prince, vice president of community impact for the United Way of The Brazos Valley, hopes that lenders come under stricter state regulation -- such as restrictions on the amount of interest charged, or provisions allowing borrowers to pay on the principal of the loans. The College Station City Council will look at a staff-recommended resolution this week that calls on the state Legislature and Gov. Rick Perry to take action in the 2013 legislative session.
- Tall City Request State to Take Action on Payday and Auto Title Lenders
NewsWest 9 (TX) 08 Jan 2013
In Texas, officials representing Midland -- or Tall City -- are showing an interest in restricting payday and auto title loans. Mayor Wes Perry, who claims to have a personal understanding of the toll that interest rates of 500 percent or more can take on a borrower, is urging the state to adopt a cap on how much these alternative businesses can charge customers. "I think they really prey on people who are less fortunate, typically poor people who can't speak the language as well," he says. "I think it's important for them to be good responsible corporate citizens and try not to be so aggressive with their interest rates -- but they call them fees, but I look at it as interest." There are about 19 Tall City businesses offering easy credit at a high cost, but Perry is encouraging more state attention to the matter because he believes it is difficult to achieve at the local level.
- El Paso City Council to Vote on Title-Loan Regulation This Week
El Paso Times (TX) 01 Jan 2013
The El Paso, Texas, City Council is slated to vote Jan. 8 on a controversial ordinance to regulate payday and vehicle title lenders. Under the proposal, payday loans would be limited to 20 percent of a borrower's gross monthly income and auto title loans would be limited to either 3 percent of gross annual income or 70 percent of the vehicle value. Loans would also have a limited number of four installments and three rollovers and renewals. Proceeds from each installment or renewal would have to reduce the loan principal by 25 percent. Additionally, the short-term lenders would be required to register their businesses with the city. The council will hold a public hearing prior to voting on the ordinance, which would take effect in July if passed.
- Let the Borrower Beware: Payday & Car Title Loan Companies Operating Only Online Are Escaping State Regulatory Functions
Laconia Daily Sun 26 Dec 2012
Loans taken out against a consumer's vehicle title or next paycheck are risky, especially when extended by firms operating exclusively on the Web. One New Hampshire woman took out a $200 payday loan for seven days and was charged $60 for the loan. Instead of withdrawing the funds from her bank account, as authorized, the business "rolled over" her loan and charged a $60 fee each week for the next five weeks. By the time $300 had been taken from her account, the borrower closed it but then received calls at her job from the loan company. A collection agency demanded $620,and refused to drop its demands until an attorney told the company it violated federal and state laws. In New Hampshire, all payday and title lenders -- either in physical locations or online -- must be licensed by the state banking department. State legislation that took effect in 2009 capped the annual percentage rate (APR) for payday and auto title loans at 36 percent. In 2010, the cap was expanded to include all loans of $10,000 or less. Some lawmakers claim the APR cap pushed the industry online, where it is more difficult to regulate. For example, the banking department has fielded at least nine complaints against "Payday-Loan-Yes," an unlicensed company based in Nassau, Bahamas; but letters to addresses there and in Utah demanding that the company apply for a license and resolve consumer complaints have been returned by the Post Office.
- Potential Disaster Looms With Auto Title Loans
KPHO.com (AZ) 19 Dec 2012
Financially vulnerable people may turn to a car title loan, but this arrangement carries more risks than benefits. Even in a best-case scenario, borrowers still pay excessive interest and put their property at risk. After taking out a six-month, $1,500 loan from Lighthouse Financial in Phoenix, at an interest rate of 180 percent, Patricia Guillen says the company seized her car in the middle of the night because of a late fee. She says she gave Lighthouse all the necessary information to deduct the first payment from her checking account, but the transaction repeatedly failed. When she went to the Lighthouse office to make a direct payment, she was told she owed $123 in late fees. In response, Guillen filed a dispute with the business's corporate office in Florida. Although the payments were posted, Lighthouse still threatened her with "collections" over the late fees and eventually repossessed her car. Getting back her vehicle would require paying off the loan in full, plus extra fees, towing, and storage charges that could add thousands to the total. Better options over car title loans include asking a credit union for a loan, person-to-person online lending, or borrowing cash from a family member or friend.
- Auto Title Loans Put Borrowers' Wheels at Risk
Cleveland Plain Dealer (OH) 18 Dec 2012
Auto title lending is a newer, growing source of short-term lending in Ohio. Like payday loans, they bear annual percentage rates (APRs) that can reach triple digits, and lenders often issue new loans to repay the previous ones. Since car title loans are secured by the borrower's vehicle, a consumer could lose his or her personal transportation if unable pay back the loan, according to a new Policy Matters Ohio report. The group found that auto title lenders use many of the same legal loopholes that payday lenders employ to avoid a 28-percent APR cap on short-term loans. Payday and title lenders avoid the restriction by either making loans under the state's Mortgage Loan Act -- which allows them to carry an effective APR of 350 percent -- or by acting as a loan broker and being licensed as a credit services organization. Ohio's 2008 Short-Term Loan Act capped APRs and gave consumers at least a month to repay a loan, but the law has been largely ignored by payday lenders. Policy Matters Ohio is calling on the Department of Commerce and Ohio attorney general's office to prohibit lenders from using by issuing payday and auto title loans under the credit services statute. The organization also recommends that the General Assembly develop legislation that bans car title lending.
- Popular Auto Title Loans Offer Fast Cash at Steep Price
Dayton Daily News 15 Dec 2012
Lenders in Ohio, both in stores and online, are offering auto title loans with fees and interest rates that can surpass 300 percent in some cases, using loopholes to sidestep rate caps on standard payday loans, according to the Dayton Daily News. Auto title loans provide quick cash -- usually in the form of 30-day loans of $100 up to $10,000 -- but with high fees and the looming threat of vehicle repossession.
- Regulators Warn Payday Lenders to Stop Blatantly Exploiting Loopholes, Or Else Lawmakers Will Close Existing Loopholes
Dallas Observer 14 Dec 2012
Although the Texas Legislature passed rules in 2011 to govern payday and car title lenders, the laws left huge loopholes. A reporter with the Texas Observer, for instance, found that by signing a photocopy of a blank check rather than a real, post-dated check, a store could rightfully claim that it was not covered by the state's payday lending laws. Meanwhile, local regulations passed in Dallas, Austin, and San Antonio have been tougher but do not apply outside of the city limits. To skirt the rules in those jurisdictions, companies offer car title loans within city limits; and when the borrower cannot repay in the allowed time frame, they direct the consumer to a branch outside of city limits to take out another loan to pay off the original and prevent their vehicle from being repossessed. Once the customer does so, he or she is no longer protected by restrictions on interest rates, fees, and number of installments, etc. The state's Office of Consumer Credit Commissioner plans to send warning letters to businesses that exploit loopholes in the law. The agency writes that it "is concerned about the possible legislative reaction to this practice and this business model's lack of transparency. The agency strongly urges any credit access business currently engaged in this practice to consider the legislative and legal consequences."