Proposed Regulations for Car-Title Loans Draw Fire

Richmond Times-Dispatch
November 4, 2009
Ress, David

Firing back at car-title lenders in Virginia, who say proposed rules will unfairly penalize them, consumer groups contend that the new regulations would protect consumers from drowning in debt and losing ownership of their personal vehicles. Advocates also insist that the move on the part of the State Corporation Commission would prevent deceptive practices that are commonplace in title loan offices. The agency's plan would require borrowers to submit their car title to the lender, so that it can be forwarded to the Department of Motor Vehicles to document the new credit line; prohibit lenders from accepting a car title as collateral if the auto already is securing a separate loan; and mandates that other loan operations sharing space with a payday lender adhere to existing payday loan rules. "A borrower … should be fully aware that he has given the lender a lien on his vehicle and that he may lose his vehicle if he doesn't repay the loan," remarked Virginia Poverty Law Center executive director James Speer. "This will not necessarily be clear to the borrower unless he is required to surrender his title." Attorney David Clarke of the lobbying outfit Virginians Against Payday Loans, meanwhile, said the ban on title loans for vehicles already being financed "would reduce the opportunity for aggressive lenders to lure borrowers into loans which they are not capable of repaying."

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