Northern Virginia has seen dozens of new car title lending businesses open since the state General Assembly legalized the industry in 2010. The total number of car title businesses has more than doubled from 184 to 395 in that time. "It's a trap, and although it's presented as a loan it's really loan-sharking," insists Virginia Poverty Law Center executive director Jay Speech. "People who get into this end up much worse off than when they started."
Auto title lenders in Northern Virginia tend to be clustered in low-income, high-poverty areas. In 2010, members of the General Assembly drew up legislation that specifically prevented title lenders from pursuing borrowers for additional money if they had already seized an automobile. Lenders also were prevented from charging more than 50 percent of the value of a car or charging interest at a rate of more than 264 percent a year. Although the legislature believed this bill would prevent the industry from growing, that prediction proved wrong; and the industry demanded new locations.
In 2011, the General Assembly considered another bill that undermined a restriction in the previous bill that prevented lenders from accepting titles of out-of-state cars. This new measure passed, expanding the reach of auto title lenders outside of Virginia. Industry leaders have lobbied heavily in the commonwealth. Since 2009, LoanMax contributed more than $500,000 and Fast Auto Loans contributed more than $200,000, with Senate Democratic leader Dick Saslaw (D-35) receiving the largest individual contributions.