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.
- Pricey Car-Title Loans Balloon; State Stands By
Cincinnati Enquirer 04 Sep 2013
Ohio has seen a significant growth in the use of auto title loans, and in the businesses that offer them. Struggling borrowers are paying annual percentage rates of up to 600 percent, and those who cannot make payments are in danger of their vehicles being repossessed.
- High Cost Lenders Have Found a Devious Way to Dodge New Laws
Business Insider (TX) 03 Sep 2013
Several Texas cities have taken action to curb high-cost lending in the state; but many big lenders are finding ways around the laws, such as giving away cash for free in exchange for title to the borrower's car.
- Personal Finance: High-Rate Loans Get Scrutiny
Sacramento Bee 25 Aug 2013
Cash-strapped consumers in California are turning to a growing number of auto title lenders to supply quick cash at high interest rates. Nearly 100 companies with multiple locations are licensed to issue car title loans in the state.
- Military Payday Loan Laws Set for Review, Improvements
Military Times 25 Aug 2013
Consumer protections for troops and their families should be broadened to cover not only payday loans but also products such as overdraft checking, installment loans, and rent-to-own contracts, consumer advocates say.
- Montgomery City Councilmen Seek Moratorium on Payday Lenders
WSFA-12 (AL) 20 Aug 2013
An item on the Montgomery, Ala., city council's agenda could threaten the future of payday and title loan businesses in the city. Councilmen Richard Bollinger and Charles Smith have proposed a temporary freeze on business licenses for these types of lending agencies.
- Auto-Title Lenders Peel Into Ohio
Cleveland Plain Dealer (OH) 16 Aug 2013
TMX Finance, the biggest auto title lender in the country, is expanding into Ohio, where it plans to open 12 outlets. Payday loans were officially banned there in 2008, but the state unofficially allowed the lenders to continue. Car title lending is not specifically sanctioned; but, like with the payday lending industry, there are loopholes that allow them to operate under other statutes.
- New York Scrutinizes Online Lenders
Wall Street Journal 06 Aug 2013
Benjamin Lawsky, superintendent of the New York Department of Financial Services, has issued 35 cease-and-desist orders to online firms that he believes might be dodging state laws prohibiting lenders from charging egregious interest rates.
- Organizations Join CLC in Fight to Regulate Payday Lenders
The Baptist Standard 25 Jun 2012
More than three dozen organizations representing consumers, financial institutions, low-income communities, and the elderly have joined Texas Faith for Fair Lending and its efforts to push for new state laws that regulate auto title and payday lenders. Texas Faith for Fair Lending, a coalition that includes the Texas Baptist Christian Life Commission (CLC), has concentrated on the controversial issue of payday lending, since church leaders noticed that payday loans hurt struggling individuals and families. "When a desperate borrower takes out a $4,000 auto title loan, pays $1,200 a month for months on end and never pays it off, something is terribly wrong with the law," said CLC Director Suzii Paynter, speaking on behalf of Texas Faith for Fair Lending. "This type of predatory lending hurts Texas families and is a clear moral issue of concern for our pastors and congregations." The new joint coalition reported that 75 percent of surveyed registered Texas voters support legislation to lower consumer costs on small-dollar loans. Eighty-five percent of respondents favored capping interest rates on payday and auto title loans at 36 percent APR or less. Public perception of these loans is largely negative. Many of these organizations say that short-term loans unfairly target low-income families, military members, and seniors. In January, new laws took effect in Texas to license payday and auto title lenders for the first time in the state.
- Birmingham City Council Extends Moratorium on New Payday Loan Businesses
Birmingham News (AL) 16 May 2012
Birmingham, Ala., has extended its moratorium on new payday loan, check cashing, and title pawn shops. The decision gives City Council until at least October to approve new rules. It established the freeze in December, including an amendment stating that that city's economic development division and planning and zoning officials would develop ways to curb "clustering" of these businesses. Councilwoman Lashunda Scales says Birmingham has too many payday loan and check cashing outlets, adding that they target vulnerable residents and send them into a spiral of debt. A gathering of too many payday lending businesses in one area may discourage other businesses from operating in the same area, she and others believe. Councilwoman Valerie Abbott said the committee has been looking into a possible modification to the zoning ordinance. Birmingham's ordinance was modeled after one in Midfield last year that limited the number of payday lending institutions to the current 12. In March, Center Point renewed its own long-standing moratorium on payday lending and title loan businesses. Because of Birmingham's moratorium, there is more interest being generated on this issue. The new federal Consumer Financial Protection Bureau chose Birmingham for the location of its first field hearing on payday lending, held this past January.
- TitleMax to Open in Cooper Center
Mount Vernon Patch 12 Apr 2012
Another car title loan outlet is expected to open in June in Mount Vernon, Va. If TitleMax wins final approval of its plans from Fairfax County, this will be the second business of its kind to open on Route 1 since Jan. 1. At least eight car title loan businesses already operate in the county. Legislation regulating the industry took effect in October 2010; but in 2011, state lawmakers passed a bill eliminating provisions that prevent car title lenders from doing business with individuals with out-of-state car registrations. The measure put additional regulations on car title lenders in Virginia, but local lawmakers fear that making the loans available to non-residents will increase the number of lenders on Route 1. Del. Scott Surovell suggested that the bill would encourage Maryland residents and active-duty military personnel to cross the Woodrow Wilson Bridge into Virginia to seek out fast cash.
- L.A. Clippers Make a Bad Play With 1-800LoanMart
California Progress Report 09 Apr 2012
In addition to payday advances, another type of high-interest, predatory product that is on the rise is the car title loan, in which a borrower's personal vehicle serves as collateral for triple-digit-APR loans. The most profitable of these companies, Encino-based 1-800LoanMart, recently signed a multi-year sponsorship deal with the Los Angeles Clippers. The Center for Responsible Lending has launched a petition calling on the professional basketball team to reconsider this partnership and publicize the dangers of car title lending. "Just as car-title lending on its own is a bad idea," write CRL's Ginna Green and Cesar Castro, "it is simply a bad idea for an NBA team to legitimize it." In California, there is essentially no limit to the amount of interest on a car title loan. With a $2,600 loan over 12 months and an APR of 180 percent, payments would be nearly $500 each month -- with more than $3,000 paid in interest alone by the end of the year. Such high interest rates should not be necessary, as car title loans are secured and the lender can seize a borrower’s car. 1-800LoanMart also has been the source of many consumer complaints, including misapplied payments, wrongful repossessions, and harassment.
- Mo. Judge Strikes Down Payday Loan Initiative
St. Louis Today 05 Apr 2012
A ruling by Cole County (Mo.) Circuit Judge Dan Green hinders a ballot proposal to limit payday loan interest rates. Green said that the initiative's ballot summary and financial estimate are "inadequate" and "unfair" and could mislead petition signers. According to the judge, the secretary of state's office should have mentioned in its summary that the measure would limit annualized interest rates to 36 percent on short-term loans. The financial summary from the auditor's office also underestimates how much tax revenue may be reduced due to lost business. Despite this ruling, supporters intend to keep gathering petition signatures by the deadline of May 6.
- Title Loan Cap Defeated
Bloomington Pantagraph 29 Feb 2012
An Illinois House panel on Feb. 28 trashed House Bill 4603 -- a proposal that would have limited interest rates on car title lenders to 36 percent, down from the current 300 percent. Critics said predatory lending laws were passed in the state in 2010, and that they need time to work before more laws are added. A Decatur pastor testifying before the panel said the loan rates are "abusive," "toxic," and lead people into bankruptcy; and he urged the panel, unsuccessfully, to pass the proposed bill.
- Group Wants Cap on Car Title Loan Rates
WJBC.com 24 Feb 2012
Illinois lawmaker have proposed legislation that would limit the allowable interest charged by car title lenders to 36 percent, significantly lower than the current 300 percent ceiling. State records show that almost 100,000 high-cost vehicle loans were issued in 2011 with interest rates of 300 percent, meaning borrowers who took out loans of $1,000 would end up repaying the principal plus $2,000 in interest. Illinois households paid more than $150 million in interest to car title lenders last year, according to data, which Illinois People's Action executive director Don Carlson called unfair to residents. "What happens is they trick borrowers into coming in for a loan that often lasts for a year or more," said Carlson, who backs the bill proposed by state Rep. Naomi Jakobsson (D-Champaign). "People have more money in their pockets because they are not spending the 300 percent interest on the loan, but communities will have more money," Carlson added.
- Partnerships Address Payday and Auto Title Lenders in Dallas
Dallas South News 25 Jan 2012
A coalition of consumer advocacy groups, churches, synagogues, and other non-profit agencies in Dallas were able to make some headway in last year's state legislation session in terms of how credit service organizations operate. Most payday and title lenders are registered in Texas as CSOs -- which as of Jan. 1 must clearly disclose fees, report on consumer and transaction data, compensate borrowers harmed by a violation of CSO regulation or finance code, register with the Office of Consumer Credit Commissioner (OCC), and provide and OCC help line number to borrowers. The group, the Anti-Poverty Coalition of Greater Dallas, said payday and auto title loans charge excessive interest rates and trap consumers in a nasty cycle of debt. The organization's lobbying efforts also made strides locally, with the Dallas City Council unanimously passed a zoning ordinance that requires short-term lenders to not operate within 1,500 feet of a like establishment, operate at least 300 feet from a residential district, and possess a specific use permit in all districts. Finally, the loan principal for a payday loan in Dallas now must be capped at 20 percent of the borrower's gross monthly income, while car title loans are capped at 3 percent of the borrower's gross annual income.
- Richard Cordray, CFPB Chief, Promises New Scrutiny of Banks That Make Payday Loans
Huffington Post 19 Jan 2012
Consumer Financial Protection Bureau director Richard Cordray, speaking in Birmingham, Ala., this week at the agency's first public hearing, pledged to turn the heat up on payday lenders -- including a select few traditional banks that have started to offer their own version of the short-term advances. Those banks have tried to differentiate their cash-advance products from those of payday lenders because of the way in which they are structured, but consumer advocates do not buy that argument. Based on its data, the Center for Responsible Lending finds that bank payday lenders are bound to fall victim to the same cycle of debt that befalls traditional payday customers. The statistics, purchased by CRL from an independent vendor, show that bank payday borrowers take out 16 loans and are mired in debt 175 days out of the year -- or twice as long as the Federal Deposit Insurance Corp. considers healthy. "The very structure of a bank payday loan makes it likely to trap customers in long-term debt even while the bank claims that the loans are meant for short-term use," noted CRL senior policy analyst Rebecca Borne. Moreover, because the bank model requires the borrower to have a checking account and to have pay and/or benefits deposited directly into that account, the risk of default is relatively low -- meaning that the rates banks charge for this service are strictly for profit. "We recognize the need for emergency credit," Cordray acknowledged at the Jan. 18 event. "At the same time, it is important that these products actually help consumers, rather than harm them."
- Assembly Kills Legislation to Regulate High-Interest Car Title Loans
Sacramento Bee 13 Jan 2012
Legislation to regulate car title loans in California recently failed. Assembly Bill 336 would have targeted loans offered at annual interest rates between 72 percent and 180 percent to car owners who have low credit, need quick cash, and have few other options for borrowing money. Currently, state law does not cap the interest rates charged on car-title loans of more than $2,500. The measure would have required the short-term lenders to use additional disclosures, including informing borrowers of the total costs over the life of the loan. Additionally, the measure would have banned structuring car title loans as a combination sale and leaseback transaction. Critics of the proposal said it would leave borrowers with even fewer options and that high interest rates are necessary because the company assumes all of the risk.
- New Hampshire House Passes Title Loan Bill
Associated Press 04 Jan 2012
Businesses offering short-term loans using automobiles as collateral soon will be able to demand 25 percent interest per month in New Hampshire. The state House passed a bill on Jan. 4, over Gov. John Lynch's objections, that permits New Hampshire's title loan lenders to charge the steeper rate. The Senate overrode the veto in September, so the bill becomes law in 60 days. Lynch said the legislation permitted excessive rates to be charged that would hurt families, communities, and the economy. The current rate is 36 percent annually, the same maximum rate established by Congress in 2006 on title loans to military members. Supporters argued the bill allows greater options for consumers who need a short-term loan, while opponents warned that it would ensnare individuals in high-interest loans they could not repay.
- NH House to Consider Title Loan Bill
Associated Press 03 Jan 2012
The New Hampshire House is taking up a legislation that would allow the state's title loan lenders to levy more than 25 percent interest a month. The Senate overrode Gov. John Lynch's veto of the bill in September. The House intends to vote on it Jan. 4. Lynch said the bill allowed excessive rates to be imposed that would hurt families, communities, and the economy. The current rate is 36 percent annually, the same maximum rate set in 2006 by Congress on title loans to members of the armed forces. A title loan is a short-term loan that uses an automobile as collateral. Supporters say the legislation gives consumers seeking a short-term loan more options.