The Downside of Car-Title Loans: Fees Double Dollars Loaned, Repossessions Likely in 21 States
Charlene Crowell | 7/11/2013, 12:49 p.m.
The report’s state-by-state analysis found that Texas leads the nation in the number of stores, loans and loan volume with 2,258 stores and 475,681 loans per year valued at half a billion dollars. Tennessee, with a significantly lower population and 837 stores had the second highest loan volume with $254 million but the highest per capita usage. Other states with annual loan volumes exceeding $100 million per year are: Alabama, Arizona, and Virginia.
The report’s policy recommendations include:
· Limiting loan interest rates to 36 percent or less and denying lenders exceptions to state usury laws – both state legislative actions;
· Requiring lenders to evaluate a borrower’s ability to repay the loan and meet other expenses without taking out a subsequent loan;
· Additionally requiring loan terms to be structured as equal payment installments with reasonable rate limitations; and
· Providing borrowers with:
- Prior notice of a vehicle sale,
- The opportunity to redeem their vehicle, and
- The return of surplus monies from vehicle sales proceeds.
In 2006, President George W. Bush and Congress agreed to cap small loans at 36 percent annually for active duty soldiers. It seems reasonable that the rest of us should be given the same protections.
Charlene Crowell is a communications manager with the Center for Responsible Lending. She can be reached at: Charlene.email@example.com.