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. Although the loans are not explicitly legal in Ohio, lenders such as CashNet and LoanMax have skirted an anti-payday lending law by getting licensed as credit service organizations.
Ohio regulators say that they can do nothing under state law against car title lenders, and legislators have not made successful efforts to close the gap. There are now more than 50 locations statewide for LoanMax alone, when there were none a year ago. A joint study by the Center for Responsible Lending and the Consumer Federation of America estimates that about 7,730 car title lenders operate in 21 states, costing borrowers $3.6 billion in interest on $1.6 billion in loans. The typical borrower was found to renew a loan eight times, paying $2,142 in interest for about $950 worth of credit, and has a one-in-six chance of getting his or her car repossessed. While car title loan critics hope Ohio legislators will specifically ban the practice, the General Assembly does not seem ready to take on the issue.