Car Title Loans or Auto Title Loans
According to California Department of Financial Institutions, car title
loans and auto title loans are designed for consumers who need to borrow
for a short length of time – generally around two weeks. These car
title loans and auto title loans are small loans secured by a borrower’s
vehicle that typically have very high interest rates. In an effort to
sidestep usury laws and other protections, title lenders sometimes refer to
such loans as “sales and leasebacks,” “title pawns,” or “motor vehicle
equity lines of credit.”
What if I Really Need Money and Need to Borrow Car Title Loans?
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Similar to payday loans, car title loans or auto title loans are marketed as
small emergency loans. However, because a typical car title loan as a
triple digit annual interest rate, the borrowers normally are trapped into a
cycle of debt. They also put at high risk an asset that is essential
to the well-being of working families -- their vehicle.
Car Title Loans and Auto Title
Loans (General Information)
Car Title Loans
(General Information Updated)
Car Title Loans and Auto
Title Loans in California
Car Title Loans and Auto
Title Loans in Arizona
Because of the high interest rates involved, sometimes in triple digits,
there is an increase of controversy regarding the car title loans or auto
title loans industry. In a news article titled "Borrower, lender
speak to Senators about car title loans" by Ann Hardie of the Atlanta
Journal published on: 07/29/05, state law makers characterized the industry
as "a clear case of abuse". Pressures on reforming the industry is
Please read the full article below:
Sharon Jones of Lithonia was difficult to hear Thursday, but her words spoke
loudly as she described her dealings with a title pawn company.
In testimony before state lawmakers, the soft-spoken Jones detailed how she
paid $1,365 on a $500 title loan — and still owed as much as she borrowed
two years ago.
"I've already paid for the loan twice," said Jones, 54, adding that her
monthly government disability check provides only enough to cover the high
interest on the debt.
Jones' story clearly was moving to several senators considering major
changes to an industry that serves people with credit problems, but at
annual interest rates as high as 300 percent.
"That is just uncalled-for," state Sen. Bill Hamrick (R-Carrollton) said
following testimony before the Banking and Financial Institutions Committee.
The committee he chairs is considering legislation following an Atlanta
Journal-Constitution series earlier this year that examined the title pawn
industry and other aspects of lending in Georgia.
At the hearing, Hamrick called for state oversight of the title pawn
industry. He said Jones' story, which he characterized as "a clear case of
abuse," may point to the need to limit how long consumers can be expected to
pay triple-digit interest before their money is applied to the principal.
"I sense that we're finding some common ground," Hamrick said, noting that
title pawn operators and consumer advocates alike have expressed some
agreement in this area and on state oversight.
Where the two camps still are at odds is on how high interest rates on loans
backed by car titles should be allowed to be. "I think that is an area where
we have to keep digging," Hamrick said.
A draft bill he circulated to committee members for consideration would
place regulation of title pawn operators under the state banking department
and cut the interest allowed on a $500 loan, for example, almost in half.
At Thursday's hearing, title pawn operators again made their case that
reducing the interest rates — currently capped at 25 percent per month for
the first three months and 12.5 percent each month thereafter — would
threaten their industry.
"Please don't put us out of business," John Robinson, an executive with
Savannah-based TitleMax, implored Sen. Steen Miles (D-Decatur). Miles has
introduced legislation that would lower the interest rate to 60 percent a
year, the rate allowed on most consumer loans in Georgia.
Her bill also would require title pawn operators to refund to borrowers any
money left over if their cars were repossessed and sold. Georgia is one of
the few states that allow title lenders to keep all the proceeds after the
debt has been paid off.
Similar measures have been introduced in the House, which held a hearing on
the issue earlier this month in Gainesville.
Sharon Jones, the title pawn borrower, said Thursday she would like to see
the industry reformed, but not shut down.
In May 2003, she borrowed $500 from a TitleMax store against the title to
her 1995 Chevrolet Beretta. Jones said she needed the money to cover the tag
and insurance on the car. "It was a bad decision on my part," Jones said. "I
would never do it again."
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