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Highlights from Report on Tennessee's Title Lending Industry 2008

July 1, 2009

The following are some of the highlights of the report conducted by the Tennessee Department of Financial Institutions on the $73 million title lending industry in Tennessee:

  • High Interest Rates Remain. Annual rates for car title loans are still 264%.


  • Still a Lemon for Borrowers. According to the report, half of the new loans made in 2006 were for $500 or less and 82% were for less than $1000. The average loan amount was only $557.00.


  • More Borrowers Lose Their Cars. There were a total of 18,199 vehicles repossessed in 2006. It appears that about 10,000 loans are originated each month (based on report that 9,939 loans on Dec 31, 2006 were less than 30 days old, and thus opened in December). This would mean that more than 1 in every 7 loans results in the borrower losing their car.


  • Live Debt Trap. Of the 83,570 agreements outstanding as of December 31, 2006, 88% or 73,631 had renewed at least one time. Moreover, 1 out every 4 agreement was renewed at least 7 times.


  • Principal Reduction Clause Not Enough. Even after a principal reduction is applied on the loan, borrowers are still experiencing triple-digit interest rates and a "payment shock" that makes it even harder for them to pay off the loan. Moreover, the clause effectively turns a so-called short-term loan into a long-term debt.


  • Growing Industry. There were 730 title lenders in 2007, 27 more than the previous year.