A new report released earlier this month by the California Department of Business Oversight provides new and disturbing data about the growth of predatory lending in California.
Liana Molina, director of community engagement at the California Reinvestment Coalition released the following statement:
For consumer loans greater than $2,500, there is no interest rate cap, and it’s clear the lenders are taking full advantage.
Sixty-five percent of loans for $2,500-$4,999 came with interest rates of 70% APR or higher (354,696 loans). For loans of $5,000 to $9,999, thirty percent of the loans (51,236) had interest rates of 70% APR or higher.
Also troubling is that the number of car title loans increased almost 10% last year in California. This is especially disturbing since car title lenders also reported to the Department of Business Oversight that they repossessed nearly 17,000 cars from their customers in 2015. Not only are these lenders originating unsustainable, high-cost, predatory loans, but thousands of people (about 15% of their customers) lost their main mode of transportation as a result of obtaining a car title loan. Even worse, of the 16,989 borrowers who had their cars repossessed, 10,357 of them had a deficiency balance, meaning the lender will continue to harass them for more money beyond just taking their car.
The Consumer Financial Protection Bureau (CFPB) announced new, proposed rules earlier this month that would create national, uniform rules for payday, car title, and installment loans. While the CFPB’s proposed rules are an excellent first step in curbing the many abuses we’ve seen from this industry, there remains several loopholes that we believe the CFPB should eliminate in the final rule.
How can I help stop predatory lending in California?
We are working with our members, allies, and consumers to urge the CFPB to implement a strong, final rule that has NO exceptions for the industry to exploit.
Join CRC by signing our petition and urge the CFPB to prioritize strong consumer safeguards and responsible lending, NOT predatory lenders.