Did Auto Title Loans Replace Payday Loans in Arizona?

September 1, 2011
car title lending news

Arizona residents are finding auto title loans even more pernicious than payday loans, which were banned in the state more than a year ago. Jean-Ann Fox of the Consumer Federation of America, an organization that helped outlaw payday lenders, says that even though the 400 percent interest rates that came with payday loans have been banished, auto title lenders can still charge up to 204 percent interest while also putting one of a borrower's most valuable assets in jeopardy. "So, consumers pay a long time before they eventually default on loans and can lose their vehicle," Fox notes. Phoenix residents Joshua Hernandez and his wife Vanessa learned that the hard way when they took out a $663 payday loan with an interest rate of 180 percent. It took the couple eight months and $1,200 to finally retire their loan. But the amount they repaid is nearly double what they borrowed. "I caution anybody who tried to do the same thing that we did," Vanessa said. "It's just a warning don't do it!"
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