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Send message to Not so Lucky
Sub: #1 Title Loans are getting as popular as PDL's
Replied on 04-19-2006, 06:55 AM
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Cash-strapped consumers are being pushed into expensive, high-risk loans, using their automobiles as collateral, according to a new report by the Consumer Federation of America. CFA says car title lenders charge consumers 300 percent annual interest for small cash loans secured by the title to cars owned free and clear.

Loans are for a fraction of the car's value, but failure to pay in full at the end of the month can lead to late-night repossessions by lenders holding a duplicate set of keys.

“Title loans trap borrowers in perpetual debt through unaffordable balloon payments, high interest costs, and the threat of repossession,” said Jean Ann Fox, director of consumer protection for Consumer Federation of America.

“Title loans for up to half the value of the consumer's car cost ten times more than it would to get an auto loan to finance the purchase of the same car.”

CFA said a survey of title lenders in eleven states and online found almost half of the states permit predatory title lending, either through weak authorizing laws or failure to close consumer loan loopholes.

In California and South Carolina, lenders only make loans that are large enough not to trigger rate caps. In Virginia, Iowa and Kansas, lenders claim their loans are open-ended to get around state limits for small loans.

The industry is reportedly pushing for state laws to legalize title loans without rate caps or adequate protections.

CFA's study, “Driven into Debt: CFA Car Title Loan Store and Online Survey,” documents that lax state laws result in the most abusive loans. Tennessee and Mississippi permit loans up to $2,500 to be due in thirty days. Georgia permits title lenders to keep all the proceeds earned from selling a repossessed car. Online lenders are entering the title loan market, claiming to use the lax regulatory environment in New Mexico or Delaware to market loans nationwide.

Title loans are extremely expensive. Title loan stores charge a median 25% per month finance charge which translates to 300% annual interest, plus additional fees average $25 per loan.

“CFA urges states to close loopholes being exploited by title lenders and to reject industry-backed model legislation to legitimize predatory title loans,” Fox said. “States that fail to protect their consumers from one-sided title loans should repeal or reform their laws, as Kentucky and Florida recently did.”


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Send message to oh2benc2
Sub: #2
Replied on 04-19-2006, 07:09 AM
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I see these advertise on TV even locally now they only used to be in Florida where most of the retirees live. What a scam - I just think what would happen if one them defaults on payment there goes your car.

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Send message to Jessi
Sub: #3
Replied on 04-19-2006, 07:18 AM
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This is scary. I've seen places that do that, usually in the lower end of town.

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Send message to Not so Lucky
Sub: #4
Replied on 04-19-2006, 07:19 AM
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ALso, when the vehicle is repo'd it goes on your credit report as a repossession and it will hit the credit score hard.

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Send message to erzeke1
Sub: #5
Replied on 04-19-2006, 09:04 AM
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I knew someone who did this, and they WILL come get your car and call all your references to tell them that!


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Send message to finsfan13
Sub: #6
Replied on 04-19-2006, 11:47 AM
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Absolutely frightening...I saw a report on 20/20 about a year ago and it was horrible. I really didn't think it was too common until I started getting payday loans and saw that several of the lenders I used also offered title loans.

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Send message to Jessi
Sub: #7
Replied on 04-19-2006, 11:52 AM
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Scary scary nightmare stuff...lol

All of these things should be illegal.

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Send message to set4sail
Sub: #8
Replied on 04-19-2006, 12:08 PM
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They should be illegal, but for some reasons states won't shut them down, just like they won't shut down the PDL industry. Is NC the only state that doesn't allow PDL?

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Send message to Not so Lucky
Sub: #9
Replied on 04-19-2006, 12:56 PM
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New York is another place than banned them.

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Sub: #10 Thieves in strip malls
Replied on 07-25-2009, 03:59 AM
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These guys are nothing but thieves bribing crooked politicians with money. This is another example of how we need to go after our elected politicians on these issues.



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Send message to Chrys Henderson
Sub: #11
Replied on 07-27-2009, 05:02 AM
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In Nevada, title loans have been plentiful for many years! After all, when you need to gamble on a "sure thing", why not?

I wouldn't blame it them, though... At least they are usually up front about their charges.





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