Florida abolished high-cost auto title loans in 2000, but that has not prevented TMX Finance from finding a way around the regulations. The nation's largest title lender has opened 26 InstaLoan outlets statewide in the past three years.
To dodge Florida's 30 percent annual percentage rate ceiling, TMX bundles its title loans with two kinds of essentially useless insurance products. It then charges high fees for the insurance, which must be repaid each time a borrower fails to settle the debt and renews the loan instead. The result is a product that is just as costly as the loans that TMX makes in Georgia, where it is headquartered, and other states where high-interest loans are not prohibited.
"The sale and financing of the credit insurance as part of these auto title loans is deceptive and abusive," said Birny Birnbaum, executive director of the Center for Economic Justice.