Fast Facts--Car Title Loans

• Car title loans are based on the value of a borrower’s car – the ability to repay the loan is not a factor in the lending decision.
• Lenders hold onto the title of the vehicle. If the borrower cannot repay the loan when it comes due, the lender has the legal right to repossess the car from the borrower.
• The nation’s largest car title lender’s average loan is about 25% of the vehicle’s retail value.
• Loan rates for car title are typically 20-30 times that of rates charged by credit card issuers.
• While most car title loans are due within a month, most borrowers are unable to fully repay the loan and interest within 30 days.
• The average car title customer renews their loan 8 times.
• On a $500 title loan, this average customer will pay back $650 in interest over eight months; the principal borrowed will be in addition.
• Because of renewals, title lenders derive far more profit from triple-digit interest than from loan principal.
• Today, 31 states have outlawed high-cost car title loans.
• In 2006, President George W. Bush and Congress capped car title loans at 36 percent annually for members of the military.