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.
- Albemarle Woman Sues Over Car Loan, Repo
Charlottesville Daily Progress 24 Jul 2011
An Albemarle County, Va., woman is suing title lender Allied Cash Advance over reportedly poor communication that resulted in her losing her car. Ramonda Brown is accusing the company of violating the Truth in Lending Act, improperly repossessing the vehicle under the Uniform Commercial Code, and misrepresentation under the Virginia Consumer Protection Act. Brown said she went to the Allied office, completed paperwork, and was given a check the same day. According to her lawsuit, Brown began making late payments beginning in 2010 through February 2011. The complaint said Brown made the payment for the previous month when she received her check on the third day of the following month. Allied employees reportedly knew that she would make late payments and would incur a late fee. After receiving her bill for $430.38 plus the $15 late fee, the suit said, Brown made a $445.38 payment on Jan. 3. The lawsuit says she then received "two confusing letters," one of which indicated that she had not acted within a 10-day waiting period that had not ended yet. Brown then contacted Allied, according to the suit. "Plaintiff was told that if she made her January payment as she normally did and then paid an extra hundred dollars, then her car would be taken off the repossession list," the lawsuit said. The complaint said Brown made that payment but then received a letter that said she had been sent a notice of default and had not acted within another 10-day period that had not lapsed yet. Brown's vehicle was repossessed on Feb. 25. Brenda Castañeda, one of the attorneys representing the complainant, said she has represented several people against title lenders. "With almost every set of paperwork that comes in ... I can always find a violation with state or federal law," Castañeda said.
- In Arizona, Title Loan Fast Money Can Mean Very High Interest Rates
ABC15.com 22 Jul 2011
A Mesa, Ariz., woman's financial crisis is a cautionary tale on taking out a title loan in Arizona. Like many young people just starting out, Jessica Gibbons got behind in her bills. She decided to take out a title loan for $2,500, using her 2010 Chevrolet Aveo as collateral. In most cases, a car title lender verifies employment, then has the borrower sign over title to the vehicle and sign the contract. The entire process typically takes about 15 minutes. After about four months, Gibbons starting getting behind on the payments, and the company that gave her the loan eventually repossessed her car. The interest rate on the title loan Gibbons received was not 8 or 12 percent, or even 20 percent; rather, it was 156 percent, meaning the $2,500 loan ultimately cost Gibbons more than $5,000. It could have cost even more if she did not own her car outright. Arizona is the only state that allows consumers to get a title loan even if they do not own their vehicle. So, if the borrower falls behind and the car is seized, the Arizona Consumers Council says they still must pay the monthly car payment and the title loan payment, too. "That's outrageous. That is a great example of predatory lending," said Tonya Norwood, executive director of the Arizona Consumers Council. "The lender puts the consumer in a position where they are not able to ever pay that loan off." Title lenders in the state can charge up to 204 percent, and their numbers have grown in the year since payday lending was banned in Arizona. More than 250 of the state's payday lenders changed their business model to become title lenders instead, and the total number of licensed title lenders today tops 1,000.
- Borrower Nightmares: $700 Dormitory Fee Costs Family Its Car
iWatch News 15 Jul 2011
A Martinsburg, W.Va., mother was overjoyed when her son won a selective spot at the American Musical and Dramatic Academy in New York, but the drama bled into real life when she took out a car title loan to pay an unexpected fee to reserve his dormitory space. Mildred Morris, a single mother with a steady federal job but no savings or credit cards, began the process of securing a college loan to pay Jonathan's tuition but was blindsided by the $700 dorm fee. She used her 2002 Pontiac Sunfire as collateral at Fast Auto Loans -- which quickly checked her references and then wrote her check. It warned that if Morris failed to make her payments, they could repossess her car. It was not until later that she realized how steep the interest rate on her loan was: 300 percent annually. "I should have taken time to go over it," Morris conceded. "When I saw how large it was, and I was like, wow." Morris fell behind on her payments and her vehicle eventually was seized by Virginia-based Fast Auto Loans. "I ended up losing my car over $700," she said. "I didn't want to let my car go, but I didn't have a choice" after falling behind on payments and seeing her references -- relatives, friends, and even her job supervisor -- receive calls from Fast Auto. Consumer protection advocates have long raised doubts about this type of credit. Car title loans, which are now regulated differently in each U.S. state, are on the list of priorities of the newly established Consumer Financial Protection Bureau, which officially begins operations on July 21. The Center for Responsible Lending's Uriah King, who says the title loan industry's "entire business model is loans that are made without the ability to pay," would like to see the CFPB restrict how often the products can be renewed -- a process that allows the lender to continue charging fees and interest but keeps the principal balance high. Jean Ann Fox of the Consumer Federation of America, meanwhile, hopes the new regulator will force title lenders to consider a borrower's ability to pay back the debt.
- Aldermen Extend Moratorium
Clinton News (Miss.) 10 Dec 2009
A 90-day ban on new title-loan businesses, pawnshops, check-cashing outlets, tattoo parlors, nail salons, and gold and precious metal purchasing outfits in Clinton, Miss., has been extended for an additional three months. Local aldermen made the decision in a unanimous Dec. 1 vote, providing more time for municipal leaders to draw up new zoning ordinances for the town -- which has at least six check-cashing outlets and four title lending businesses, both of which offer payday loans. Clinton Mayor Rosemary Aultman has stressed the importance of ensuring "that we get these businesses in the right location and have places for them." That line of thought already is playing out in other metropolitan areas. Jackson, Ridgeland, Canton and Byram all recently have imposed moratoriums on new permits for like businesses; while Flowood, Madison, and Pearl already have ordinances in place to regulate such businesses.
- Aldermen Put Hold on Certain Types of Businesses
Clinton News 10 Sep 2009
Officials in Clinton, Miss., have banned new title loan shops, check-cashing outlets, and other specific businesses from opening in the city in the next 90 days. The moratorium -- which also applies to tattoo parlors, businesses that buy gold and precious metals, pawn shops, and nail salons -- gives the Board of Aldermen time to study zoning laws in preparation for a big zoning revamp. The freeze affects at least four title loan stores -- many of which, along with the check-cashing locations, provide payday loans. "I've heard from many in the city that this [moratorium] is exactly the type of thing they want to see," commented Clinton planning and zoning commission member Ryan Tracy. "They want economic development to be channeled toward something that builds the community, and not something that has been viewed as a detriment."