Editor’s note: The CFPB, a federal agency, has proposed new rules for payday, car title, and high-cost installment lenders.
BUT, they need to hear from consumers- that means you! We have an easy-to-use page where you can weigh in- it only takes a minute and will help bring about important consumer protections with these loans. Please share a line or two in the comments box about why you care about this issue and want to see strong federal reforms.
Similar to payday loans, car title loans also generate a LOT of complaints- and create a lot of financial damage for consumers who use them. In fact, new research from the Consumer Financial Protection Bureau finds that 1 in 5 car title loans will ultimately result in the borrower having their car repossessed. As Liana Molina, director of Community Engagement at the California Reinvestment Coalition commented: “At least car thieves don’t take half your income before stealing your car.”
The compilation below is similar to our Payday Lender Hall of Shame. We’ll be adding in stories about predatory car title lending below.
If you haven’t yet, you’ll want to weigh in on the CFPB’s new proposal to more strongly regulate payday, car title, and installment lenders. We have a website where you can do it: CFPB Comments. We know the industry will be submitting a lot of comments about protecting their profits (at the expense of consumers), so it’s important the CFPB hear from you!
Beware of Payday Loan Wolves My husband and I scrambled to call banks, lawyers, and anyone we thought could help save this family’s house. Unfortunately, we were too late. The home had been foreclosed on and sold, and now she was about to lose her car, which she needed to get to work every day. We decided to go with her to the store to see if we could help, but there was nothing to be done. The lender that offered her help in her time of need set her up to fail. June 30, 2016.
Borrowing with auto title loan puts vehicle at risk Liana Molina explains that in comparison to shady car title lenders, at least car thieves don’t take half your income before stealing your car. Newsday. Sheryl Nance-Nash.June 11, 2016.
“A few days later, this headline appeared in Utah: Pleasant Grove woman dies in crash while fleeing repo man, police say. The article explains: “Ashleigh Holloway Best, 35, was estimated to be traveling at least 70 mph on a 35 mph road when she smashed into a tree about 12:20 a.m. at 682 N. 100 East. She had to be extricated from the vehicle and was pronounced dead at the scene, said Pleasant Grove Police Lt. Britt Smith.” Why was she travelling this fast? She was being pursued by a repo man, who was trying to repossess her car on behalf of TitleMax, a car title lender.” Daily Kos: Predatory Lending is Literally Killing People (May 26, 2016)
“Like the idea of paying triple-digit interest rates on a loan, forking out more dough in additional fees and watching the repo man tow away your car? Auto title lenders have got just the thing.” CBS MoneyWatch: Another loan to steer clear of (May 18, 2016)
How does the debt trap work? Watch this PBS NewsHour episode about T.J. McLaughlin, who had to take some time off work after a medical problem. Short on money for bills, he borrowed $1,200 from a car title lender (North American Title Loans), at 300% interest rate. But when he lost his job and was unable to make the payments on this loan, they took his car.