Car Title Loans and Yet Another Study

Nelson County Times 
July 22, 2009

In Virginia, a seven-member legislative panel tasked with recommending ways to regulate the car title loan industry decided in June to continue studying the matter. The panel is slated to meet again in September. The state caps interest rates on payday loans at 36 percent, but car title lenders are not subject to interest and fee restrictions under the state open-end credit law, aside from the requirement that they do not assess any fees during the first 25 days of the loan. Critics of car title loans are pushing for their inclusion in the 36 percent annual interest rate cap, insisting that they can be even more problematic for borrowers than payday loans. According to Center for Responsible Lending senior researcher Leslie Parrish, "They can both trap borrowers in long-term debt, but with the payday loan, the collateral is a personal check. With a car title loan, it's probably the family's most important asset."

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