As part of a crackdown on title loans, which use a borrower's personal vehicle as collateral, New York's attorney general has brokered deals with 10 companies that agree to stop repossessing cars in the state at the behest of national title lenders.
Under New York law, unlicensed lenders can charge no more than 16 percent interest; but title loan companies dodge this limit by basing their operations on the Web and accepting applications online. They then levy rates ranging anywhere from 100 percent to 700 percent. Borrowers who cannot pay must either renew the loan, incurring more interest, or forfeit title to the car.
The agreements negotiated by AG Eric Schneiderman should make repossession more difficult, however. "I applaud these companies for agreeing to stop obeying orders from predatory title-loan companies that take advantage of unsuspecting New Yorkers," he said. "Any other business that repossesses the vehicles of New Yorkers based on illegal title loans should recognize that my office will not tolerate this kind of behavior."