4 things you need to know about them

If you need cash fast, a title loan may be the answer. These loans are relatively easy to obtain, but there are a few things you need to know before applying. In this blog post, we’ll discuss four important things you need to know about title lending. We’ll also give you some tips on how to get the best deal on a title loan. So if you are considering applying for a title loan, be sure to read this article first!

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  1. What are title loans?

Title loans are a type of secured loan. This means that the loan is secured by collateral – in this case, your car. If you fail to repay the loan, the lender can seize your car and sell it to recover their losses. Therefore, title loans tend to have higher interest rates than other types of loans.

Also, title loans are usually short-term loans, which means you’ll have to pay them back fairly quickly. If you are not sure that you can repay the loan on time, it is best to avoid applying for it. This way, you don’t risk having your car taken back. On the other hand, see Confront the Red for the best title loan resources and guides so you know you can pay off the loan quickly. After all, a title loan is great for getting some quick cash. Also, if you’ve opted for title loans, be sure to research the best interest rate before applying. Some lenders may offer lower rates than you’ll find at traditional banks.

  1. How do title loans work?

When you apply for a title loan, the lender will appraise your car to determine its value. They will then give you a loan based on a percentage of the value of your car. The typical loan amount is between 25% and 50% of the car’s value. So if your car is worth $5,000, you might be able to get a loan of up to $2,500. Most lenders will give you between 30 and 90 days to repay the loan. If you can’t repay the loan within that time, you may have to renew the loan or risk losing your car. The most important thing to remember is that you will have to repay the loan, plus interest and fees. So be sure to budget accordingly!

  1. What are the requirements?

The requirements for obtaining a title loan vary from lender to lender, but you will generally need to provide some general information. You will need to show ID, proof of income and your car title. You may also be required to provide a copy of your driver’s license and registration of your vehicle. Namely, the lender will want to make sure that you are the legal owner of the car and have the ability to repay the loan. Therefore, it is important to have all of these documents ready before applying for a title loan. More so, make sure the information on all these documents is up-to-date and accurate.

  1. How much can I borrow?

The amount you can borrow when you apply for a title loan depends on the value of your car. The lender will appraise your vehicle and determine how much they are willing to lend you. However, it is important to remember that you will probably only be able to borrow part of the value of your car. This is because the lender wants to make sure they can recoup their losses if you fail to repay the loan. You may be able to get a loan for up to 50% of the value of your car, but it’s important to remember that interest rates will be higher than with other types of loans.

For example, if your car is worth $5,000, you might be able to get a loan for $2,500. However, the interest rate on this loan could reach 25%. This means that you will have to repay the loan in full plus interest within a relatively short period of time. This can be difficult to do, so it’s important to make sure you can afford the monthly payments before applying for a title loan.

So this is it. These are four important things to know about title loans. If you’re considering applying for it, be sure to do your research and shop around for the best deal. And, most importantly, make sure you can afford the monthly payments before you sign on the dotted line!

What You Need To Know About Car Title Loans And How It Works

Do you need cash urgently to pay rent, bills, or other expenses? A vehicle loan may be the best solution for your money woes.

‘s title to the lender and receive the money.

Based on the current market value, the amount of a title loan you get will be determined by the value of your collateral.

It is essential to understand the differences between these two types of auto loans. Before you apply for an auto loan, it is crucial that you fully understand the terms between you and the lender.

  1. One-time installment loans: You must repay the entire amount owed on this car title loan. This includes the 25% monthly interest rate (finance cost) and any other charges. Borrowers must pay the entire amount in one payment or risk losing their vehicle.
  2. Auto title loans can be financed with installment loans. For auto title loans, you can make multiple payments over three to six months.
  • Total amount of the loan 
  • Monthly Interest Rates
  • The loan term
  • Additional charges

Lenders don’t care about your income or credit score. It’s easy to obtain a car title loan. To verify the documents and inspect the vehicle, the lender will require that the car be delivered.

This is how an auto title loan works.

Step 1: You complete the online application form.

Step 2: Show the lender your car and any other documents, including photo ID, proof that you have a vehicle title, proof of your auto insurance, and your driver’s license.

Step 3: The lender verifies the vehicle’s condition and signs off on a loan agreement.

Step 4: He collects the money and retains your car title

Step 5: After 30 days, you repay the loan plus any interest. You will receive the title back to your car after that.

Lenders might also request that borrowers install GPS trackers (or devices that turn off the car’s ignition in the event of a trade-in).

A simple example of how to get a car loan

Travis is cash-poor and can’t afford to pay his daughter’s medical expenses. He applies for money from a lender, and his vehicle is used as collateral. He pays back the loan amount and gets his vehicle’s title.

How can I find trustworthy lenders?

If you’re looking for a reliable lender, we recommend you give greendayonline.com an opportunity. They will also provide you with access to the best local lenders. Just enter your vehicle information, and they’ll connect you to the best lenders.

You can now apply for an auto loan and get help with your emergency needs. Find out more about car title loans at greendayonline.com/title-loans/.

The Advantages and Disadvantages of Securities Lending Versus Registration Lending

LOS ANGELES, December 23, 2020 / PRNewswire / – When an emergency arises and you need cash quickly, using a vehicle as collateral for a loan can be a good solution.

But if you are considering a title loan or a registration loan, it is essential to understand what defines these very different types of loans. Although both are related to the use of a vehicle in exchange for funds, these two types of loans have their own advantages and disadvantages.

What is the difference between a title loan and a registration loan?

First, it is essential to distinguish between the title of a vehicle and its registration. The title is used to indicate the ownership of the car. When a vehicle is sold, title will transfer from the current owner (often a dealership, bank or private seller) to the buyer. On the other hand, a registration means that the vehicle can be driven legally.

With this in mind, the essential distinction between these two types of loans is that a title loan requires a blank title in the name of the loan recipient. A blank title means that there are no outstanding loans or unpaid tickets that would prevent the vehicle from being sold. In contrast, enrollment loans only require the registration to be in the name of the loan recipient, regardless of who the vehicle title may identify.

The benefits of a title loan

  • Loan amounts may be larger – With a title loan, the loan amount is based on the value of the vehicle. By securing the loan by offering the title as collateral, the lenders can give more money as they are more likely to be repaid.
  • Interest rates are lower – The interest rates on title loans are generally slightly lower than those on registration loans because of the collateral provided by the title of the vehicle.

The disadvantages of a title loan

  • The vehicle can be taken back – Since title is turned over to receive the loan, the loan company could attempt to repossess the car if it is not paid back on time.
  • The title must be clean – This means that there is no lien on the vehicle, whether it is an outstanding car loan or unpaid tickets.

The advantages of a registration loan

  • Vehicle can be financed – A borrower does not need to be the outright owner of the car to be eligible for a registration loan.
  • The car cannot be taken back – Since the title is the document that signifies ownership, a loan company cannot claim the vehicle on the sole basis of possession of the registration.

The disadvantages of a registration loan

  • Credit and income are factors – Since a registration loan is unsecured, lenders will use standard loan requirements such as employment and credit score to determine the loan amount. This means that registration loans may not be readily available to someone who is unemployed or who is working to get better credit.
  • Loan amounts may be less – Registration loans are often for lower amounts than securities loans and usually have higher interest rates.

What is the best option?

The choice between a title loan and an enrollment loan depends entirely on the borrower’s circumstances. Vehicle registration loans tend to be beneficial for borrowers who need less money and still pay off their vehicle. Title loans work best for owners of cars with proper title who are looking for access to more funds.

Either way, it’s important to understand the loan requirements and repayment expectations before signing the title or vehicle registration.

Notice: The information provided in this article is for informational purposes only. Consult your financial advisor about your financial situation.

SOURCE Advancing America

Research data suggests Canadians are turning to expensive car title loans during recession – National

If internet search trends are a window into the minds of consumers, a recent report suggests that a growing number of Canadians are considering unwise financial options, observers say.

Amid a resurgence of pandemic-related interest in personal finance information, the number of searches involving auto title lending nearly tripled in Canada from March through September this year to 16,900 per month, from about 5,900 searches per month at the same time. times a year earlier, according to SEMrush.

READ MORE: COVID-19 brings home testing to online car buyers

The Boston-based marketing firm that studies internet search trends said Canadian searches for payday loans, meanwhile, fell 43 percent to 22,900 from 39,700 in the same period. , which has been marked by millions of people who have lost their jobs as non-essential stores and industries have been forced to close in order to contain the spread of the COVID-19 virus.

The story continues under the ad

Click to play the video:

Payday loan warning

Payday Loan Warning – June 22, 2019

“The most surprising thing we noticed has been an increase in demand for auto title loan research, which is, I think, quite unique for Canada compared to the United States, where we don’t have saw that type of increase, ”said Eugene Levin, chief strategy officer for SEMrush, in an interview.

He said he was unsure why searches in the United States had not also increased, but suggested that a possible explanation for the increase in searches for auto title loans and the corresponding decline in loans on auto securities. salary in Canada could be that potential applicants have a car but no job.

READ MORE: When he lost his income amid COVID-19, Spring Financial gave him a loan but no money up front

“A lot of people have cars,” Levin said. “The terms of these loans are better than payday loans, the interest rates are lower, so they are more attractive. At the same time, you don’t need a job to get an auto title loan like some payday loans do.

The story continues under the ad

An auto title loan works on the same basis as a home equity loan. They are billed as short-term business, secured by a lien on the vehicle. In the event of non-payment or default by the borrower, the lender can repossess the vehicle in order to recover his money.

Click to play video:

Young workers face financial uncertainty as pandemic benefits end

Young workers face financial uncertainty as pandemic benefits end – October 1, 2020

Levin said SEMrush statistics do not indicate how many researchers have actually signed up for a car title loan.

An online search for “car title loan” produces dozens of results.

Most providers offer a wide range of loan levels – one promises $ 1,000 to $ 50,000 – and many say their interest rates are “the lowest in the industry,” from “10 to 49 for. hundred “.

The Canadian Press contacted several auto securities lending companies for the story, but no representative was available.

The story continues under the ad

People who are desperate for money will always find someone who is trying to take advantage of their situation, said Brian Betz, advisor for Money Mentors in Calgary, adding that car title loans are just one of many. fast money online programs that they could choose from.

READ MORE: Pay $ 4,300, Get $ 1,750 Back After 3 Years. A man’s warning about “savings loans”

“The increase in securities lending is probably more on those who have no assets. Their car is for all intents and purposes all they have, ”he said.

“Typically, when you get a title loan, it’s not for $ 300 to $ 500. You get a few thousand dollars on this vehicle and at their interest rates it can be very difficult to pay off.

He said that usually about half of the working Canadian workforce is at an insolvency wage, so an event like the pandemic can create thousands of dire straits.

There are better options when bills can’t be honored, Betz said, and they should start by seeking help from an organization like hers that offers free credit counseling.

If you can’t afford to make payments on an existing personal loan or mortgage, you should talk to the lender to see if the payments can be deferred or reduced over a longer repayment period, he said. .

The story continues under the ad

READ MORE: Man with autism told to pay $ 4,442 to get $ 1,750 after 3 years with Spring Financial loan

A consolidation loan can allow the lender to simplify and combine multiple loan payments at a much lower interest rate than a title loan, he added.

Betz warned those looking for solutions to a short-term cash crunch to consider loan fees as well as interest rates, using a Calgary client who was desperate after seeing his hours off as an example. reduced work due to COVID-19.

“He had two loans, not title loans but not payday loans either, and while the interest rate was capped at a certain level, I think it was 32%, in exchange for a borrowing $ 14,000 through these two loans, there was $ 10,000 in fees added to that, ”he said.

“There were cancellation fees, insurance fees, these fees and charges. These are the types of loopholes that these people exploit.

© 2020 The Canadian Press

Canadians show increased interest in high interest auto securities lending during recession

CALGARY – If internet search trends are a window in the minds of consumers, a recent report suggests that a growing number of Canadians are considering unwise financial options, observers say.

Amid a resurgence of pandemic-related interest in personal finance information, the number of searches involving auto title lending nearly tripled in Canada from March through September this year to 16,900 per month, from about 5,900 searches per month at the same time. times a year earlier, according to SEMrush.

The Boston-based marketing firm that studies internet search trends said Canadian searches for payday loans, meanwhile, fell 43 percent to 22,900 from 39,700 in the same period. , which has been marked by millions of people who have lost their jobs as non-essential stores and industries have been forced to close in order to contain the spread of the COVID-19 virus.

“The most surprising thing we have noticed is an increase in demand for auto title loan research which is, I think, quite unique for Canada compared to the United States, where we haven’t seen this guy. increase, ”said Eugene Levin, chief strategy officer for SEMrush, in an interview.

He said he was unsure why searches in the United States had not also increased, but suggested that a possible explanation for the increase in searches for auto title loans and the corresponding decline in loans on auto securities. salary in Canada could be that potential applicants have a car but no job.

“A lot of people have cars,” Levin said. “The terms of these loans are better than payday loans, the interest rates are lower, so they are more attractive. At the same time, you don’t need a job to get an auto title loan like some payday loans do. “

An auto title loan works on the same basis as a home equity loan. They are billed as short-term business, secured by a lien on the vehicle. In the event of non-payment or default by the borrower, the lender can repossess the vehicle in order to recover his money.

Levin said SEMrush statistics do not indicate how many researchers have actually signed up for a car title loan.

An online search for “car title loan” produces dozens of results.

Most providers offer a wide range of loan levels – one promises $ 1,000 to $ 50,000 – and many say their interest rates are the “lowest in the industry,” from “10 to 49 percent. hundred”.

The Canadian Press contacted several auto securities lending companies for the story, but no representative was available.

People who are desperate for money will always find someone who is trying to take advantage of their situation, said Brian Betz, advisor for Money Mentors in Calgary, adding that car title loans are just one of many. fast money online programs that they could choose from.

“The increase in securities lending is probably more about those who have no assets. Their cars are for all intents and purposes all they have,” he said.

“Usually when you get a title loan it’s not for $ 300 to $ 500. You get a few thousand dollars on that vehicle and at their interest rates it can be very difficult to pay off. “

He said that usually about half of the working Canadian workforce is at an insolvency wage, so an event like the pandemic can create thousands of dire straits.

There are better options when bills can’t be honored, Betz said, and they should start by seeking help from an organization like hers that offers free credit counseling.

If you can’t afford to make payments on an existing personal loan or mortgage, you should talk to the lender to see if the payments can be deferred or reduced over a longer repayment period, he said. .

A consolidation loan can allow the lender to simplify and combine multiple loan payments at a much lower interest rate than a title loan, he added.

Betz warned those looking for solutions to a short-term cash crunch to consider loan fees as well as interest rates, using a Calgary client who was desperate after seeing his hours off as an example. reduced work due to COVID-19.

“He had two loans, not title loans but not payday loans either, and while the interest rate was capped at a certain level, I think it was 32%, in exchange for a borrowing $ 14,000 through these two loans, there was $ 10,000 in fees added to that, “he said.

“There were cancellation fees, insurance fees, these fees and charges. These are the types of loopholes that these people are exploiting.”

How to choose the best online business?

If you are someone stuck in the torrid middle looking for your way to solve your financial problems, then you need to put yourself in place to car title loan online is the best way to back up your savings account to set aside money for larger purchases. For extra income you can also find a second job to earn extra money as there are a few people who turn to trading for extra profit but sometimes a more immediate response is needed. This is the good reason why and how loans can only be perfectly suitable if you have the ability to repay them and you are sensitive to the whole process then surely a car title loan could be the right choice for you. If you are a car owner, the appropriate option to choose would be car title loans, as there are several things you need to consider. Car loans are said to be directly proportional to loans similar to a conventional loan that you can get from banks where an individual offers property (a house in most cases) as collateral.

There are various companies ready to offer title loans to their clients. A good thing with these types of loans is that the lender will not base their loans on your credit rating.

Read the blog post to find out how to choose the best online business!

  • Carefully check the reliability of lenders.

Before starting anything with any particular business, it is essential to know and fully understand the reliability of online businesses. These loans can be located anywhere in the world and anywhere in the world, which makes the search process ready easy. There will be certain times when you will be a bit scared that most of them might be a scam. Although your first step, however, should be to read all the terms and conditions of these lenders to attach to their applications in order to know whether this online title lender is genuine or not. Another good way to go further is to read the reviews of these lenders and learn more about their terms and conditions. You also have the opportunity to ask questions about different lenders online and find out about the experiences your friends and family members have had with particular lenders.

The first thing to understand before getting one is to check from when and where you get the loans. There is a wide variety of banks with the availability of many companies that provide loans, and each of them offers different types of policies. This is particularly the case of car title loans. Your ownership of your car is at stake; you have to be careful with your merchandise. Some companies offer dodgy rules where you only have a short period to pay off a loan before you take your car. Be sure to research all of the companies you are considering, read all of their policies, and select the one that best suits your needs.

  • Consider more of an online business.

Having to get your hands on car title loans online, you must realize that there is no need to be in a hurry about your vehicle title or the property chosen by a lender. You will need to research the lenders and apply for the loans legally. All paperwork must be done as required by law. To make things look more authentic, you should also make copies of the documents and have them signed by the parties on both sides before proceeding. When the application process is started, make sure you have chosen several lenders. DMV, your Department of Motor Vehicles, is relatively well-known for being a great place to check out the various lenders they have dealt with, which can basically help you make a better choice.

  • Avoid possible scams from different lenders.

The most crucial factor to consider is to note that not all online car title loans are the same. Few lenders have a habit of being good with their leasing words, which might mislead you for choosing a random online title lender. Regardless of the good things you hear about them through various lenders, this all needs to be cross-checked. Search online for information on selected lenders and probably even consult others who have had experience with their services. Cross-check all the data by consulting the database of lenders. They can take you several hours to research information about lenders online, and their title lending database section can be considered a great place to find information and make an informed borrowing decision.

GSB takes out car title loans to keep interest rates low

The GSB logo on display at a Money Expo. The state-backed bank introduces auto title loans to put pressure on interest rates. (Photo by Patipat Janthong)

Government Savings Bank (GSB) plans to enter the auto securities lending market with a focus on retail loans worth up to 200,000 baht per borrower.

The bank’s penetration into the auto securities lending market is aimed at lowering the interest rates charged in this lending segment, President Vitai Ratanakorn said.

The Bank of Thailand has cut interest rates on auto securities lending to 24%, from 28% on Aug. 1, but the rate remains high, Vitai said.

GSB plans to cap the interest on the car title loan at 18%, plus or minus not more than 2%. The 18% rate will be assessed based on customer profiles, Vitai said.

For example, a car with good conditions may receive an interest rate of 16%, while older models or vehicles with risk may see 2% interest added to the 18% rate.

The 18% interest rate for auto title loans, classified as unsecured loans, is lower than the interest rates charged by non-bank companies.

But GSB can still turn a profit because the bank’s existing unsecured loan products have interest rates below 18%, Vitai said.

Non-bank companies involved in auto securities lending have a net interest margin of 15-20%, higher than the NIM of 2% in public banks and 3% in commercial banks, he said.

GSB is evaluating a potential joint venture partner in the automotive securities lending industry.

Are title pawns and title loans legal in Georgia?

Title loans have become very popular in recent years in the South. However, many people are unaware of the difference and the legalities behind securities lending and securities pawns. Some of you reading this might not have known they were different at all until this second – and that’s okay! We will tell you everything.

The difference between securities loans and securities pawns

Yes, it’s true, they are both very similar. However, you need to know the difference because one is legal and the other is illegal in the state of Georgia! So let’s go, shall we?

Securities lending

A title loan is a type of financial assistance that uses the title of your vehicle as collateral so that you can borrow funds. You don’t need to have perfect credit, but some providers will verify that you are not bankrupt.

Some companies call them car title loans, pink slip loans, auto equity loans, auto equity loans, etc. This is how they get confused and slip under the radar of state law because title lending in Georgia is illegal.

Title pawns

A title pawn, on the other hand, is completely legal in Georgia. However, they still use your vehicle title as collateral. Also, there is no extensive credit check.

So what’s the difference? Well, you have to agree that you will be separated from the title of your vehicle for the duration of the loan.

The dangers of title tokens

Now, if you can afford to repay your loan, there’s really no danger of title pawns. However, it’s incredibly easy to fall into the cycle of debt if you’re not careful and plan properly.

If you haven’t heard of the common debt cycle or debt trap as it’s otherwise known, here’s how it works:

  1. You take out a title pledge loan.
  2. You realize you can’t pay it back for some reason.
  3. You take out a different loan to pay off the original title loan.
  4. You cannot afford to repay the second loan.
  5. So you take out another loan.
  6. Thus, a cycle is born, from which it is extremely difficult to break free.

Yes, it can leave you in a very bad situation, very quickly. Not to mention they don’t take life very well throwing expensive and catastrophic curveballs at you!

Luckily, there are ways to plan ahead and check if you can afford it before signing up for anything.

To get started, you can use a free online loan calculator. Here you enter the loan amount, the interest rate, how much you can afford to pay each month, and the term. Then he will tell you if you can afford the loan. Sounds good, right?

Once you’ve done that, save for your loan. It seems rather counter-intuitive, but it can prevent you from falling into the terrible debt cycle we talked about earlier. Setting aside a specified amount until you need a loan can help you meet the repayment deadline and ultimately keep your vehicle and your life intact.

New usury laws to make title pawns safer for you

I hope we haven’t just pushed you away from getting a title pawn. Why? Because Georgia has enacted new usury laws to make acquiring one much safer for you. Let’s take a look at the details.

As we mentioned at the start, title pawns have become more and more popular over the years – and believe us, the feds have taken notice! Therefore, they have cracked down on the pawnbroking industry, to protect you and your financial health.

The new usury laws have been released by the Consumer Financial Protection Bureau. This regulation requires pawnbrokers in title to determine if you can repay the loan before giving it to you. While people shouldn’t take out loans if they can’t afford to repay them, the usury law has helped people (who would otherwise make rash decisions in times of crisis) to stay out of the debt cycle.

Reimbursement terms and conditions

Since title pawns fall into the category of “pawnbrokers”, providers may charge you up to 25% interest per month for the first 90 days (plus fees). After that, it goes down, but an additional fee is charged each day you go over the 90-day “limit”.

It is important to note, however, that these pawns must be issued for 30 days (as stated in the usury law). If you can’t pay it back that quickly, the term will be extended in 30-day increments. For those who reach three overtimes, you’re entering the cycle of debt, so do your best not to keep asking for more – you’ll end up paying way more than you’re worth.

Contract requirements

If you have ever taken out a title loan, you will know the requirements. They haven’t changed much under the new usury laws. Anyway, let’s take a look at them now.

The requirements of the contract consist of the following:

  • The 30-day interest rate;
  • The payment of extensions and the associated costs;
  • The start and end date of the repayment period;
  • The total amount (in dollars) to be reimbursed; and
  • The declaration informing you that in the event of non-payment, your vehicle will be repossessed.

Beware of these vendors

Unfortunately, there are still companies operating in Georgia that illegally offer title loans. These providers will not give you the legal documents and will not follow usury laws. Not to mention that their interest rates are abominably high.

To avoid selling your soul to these illegal moneylenders, be sure to do your research. The internet is full of reviews of all the places you could go, so check them out first. This will save you a world of hassle in the end.

The final take

We know that was a lot of information that was definitely a bit confusing and somewhat scary. But don’t worry, you can find a summary below to calm your nerves and show you that there’s nothing to worry about (as long as you plan ahead!).

  • Title pawns in Georgia are legal, title loans are not.
  • You can use online calculators to check whether you can afford it or not.
  • New usury laws have been enacted by the Consumer Financial Protection Bureau.
  • These laws ensure that the lender must verify that you can afford to repay it in full before allowing you to sign the agreement.

How Do Car Title Loans Work?

All loans carry risk if they are not repaid on time. One particularly troubling consequence of a car title loan, however, is if you default on your payment obligations: the lender can take your vehicle.

Before you consider getting a title loan, think about the potential potholes you will encounter if you use your vehicle as collateral to borrow money.

What is a title loan?

Definition of car title loan

An auto title loan is a short term loan that allows you to get a small amount of money in exchange for handing over the title of your vehicle to the lender. You will also have to pay significant fees to borrow money.

Let’s say you own a car worth $ 5,000 and you find yourself in an emergency that requires $ 1,000. A title loan allows you to borrow against your vehicle, so you can quickly get that $ 1,000. Just like a mortgage is against your home, a title loan uses your vehicle as collateral.

“One of the main pieces of information people need to understand about a title loan is that it uses your vehicle’s equity to secure the money you borrow,” says Bruce McClary, vice-president. president of communications at the National Foundation for Credit Counseling. .

In most cases, you must own your vehicle to be eligible for an auto title loan. The term “car” may appear in the name of the product, but these loans may also be available for motorcycles, boats and recreational vehicles.

While some lenders will offer loans if a car is still in repayment, most require the owner to hold title without any debt related to the vehicle. Consumers can typically borrow between 25 and 50 percent of the value of the car.

How does securities lending work?

Car title loans come in many forms. Some are lump sum loans, which means the borrower has to pay the full loan amount plus interest charges within a month or so. Installment loans, with similarly high APRs, can be repaid over three or six months, depending on the lender.

When applying for a car title loan, be prepared to show the lender clear title, proof of insurance, and photo ID. Some lenders ask for a second set of keys.

While securing a title loan can be easy, the convenience comes with significant costs and risks, according to Graciela Aponte-Diaz, director of federal campaigns at the Center for Responsible Lending.

“Some auto title lenders install a GPS device – dubbed a ‘kill switch’ – that can prevent the borrower’s car from starting, using this practice as a way to collect debt or facilitate foreclosure of the car,” explains Aponte-Diaz. . “In addition to being (the) primary form of transportation to work, to the doctor and elsewhere, a car is often a person’s biggest financial asset. The looming threat of losing your car is anxiety-provoking, to put it mildly.

Disadvantages of Securities Lending

The main disadvantages of title loans are a short repayment period, very high interest rates, and the potential loss of your car if you default on your payment.

“These are generally short-term loans with very tight repayment cycles,” says McClary. “If you can’t pay the loan back when it falls due, it gets carried over to another cycle with more fees. This creates a very difficult situation for people who are already struggling to repay. This is the exact definition of the debt cycle.

In addition to tight repayment terms, auto title loans have extremely high interest rates. Lenders often charge 25% each month in finance fees. On a $ 2,000 loan, you will pay an additional $ 500 in interest if the loan is paid off in 30 days. If you are behind on your payment and those interest charges add up, the loan can end up costing much more than the original sticker price.

Perhaps the biggest downside is losing your car. If you can’t pay it back, the lender can take your vehicle back. In 2016, a study by the Consumer Financial Protection Bureau found that 20 percent of those who take out title loans have their vehicles foreclosed.

Alternatives to securities lending

With such drawbacks, McClary recommends reaching out to traditional banks and credit unions to explore other, less expensive lending options.

“A lot of people might avoid traditional lenders because of assumptions about their credit,” he says. “It’s the most dangerous thing you can do. You are depriving yourself of money that you could potentially save.

Even if you don’t have a bank account, have a lower credit rating, or have struggled with bad financial decisions in the past, it’s worth investigating all of your loan alternatives. “It’s interesting how flexible these traditional lenders can be,” says McClary. “There are a lot of credit unions that are willing to work with unbanked customers. “

McClary says he rarely advises increasing credit card debt, but stresses it’s a better option than a title loan. “If you have unused credit on a credit card, you can count on it to cover your costs,” he says. “In most cases, the interest rate on your credit card will be much lower than what you get on a car title loan. And this route prevents you from potentially losing your vehicle.

At the end of the line

If you decide that a car title loan is your only option, make sure you understand the terms of the loan. Securities lenders are required to show them to you in writing before signing, and federal law requires them to be honest and upfront about the total cost of the loan. And remember, these costs are probably not worth the risk.

Car title loans often lead people to get into debt and lose their cars,” says Aponte-Diaz. “Car title lenders often make people worse off than they were before they took out the loan.”

Griffith, Zwick: Triple-digit interest rate securities lending more dangerous during COVID-19 pandemic

By Kelly Griffith and Cynthia Zwick

As working Arizona families struggle to maintain jobs and reliable sources of income in a historically dire economy, the last thing they need is a predatory debt trap making matters worse.

A securities lender recently claimed his business was essential: charging triple-digit interest on loans that trap people in debt at the risk of losing the vehicles they depend on. It is an insult to families who are most exposed to the health impact of COVID-19 as well as financial devastation.

Arizona voters sent a clear message in 2008 that payday lenders were unwelcome to continue charging vulnerable consumers outrageous interest rates of up to 391%. Voters rejected a payday industry-sponsored voting measure by a 3 to 2 margin, which ultimately led the state to cap payday loan interest rates at 36%.

And a recent poll indicates that Arizona voters, regardless of their political party, strongly oppose these predatory practices. Seventy percent of Arizona voters support a 36% interest rate cap. Eight in 10 Americans (81%) support a ban on all high interest loans during the coronavirus crisis, with more than half (56%) doing so strongly.

Even though the recent increase in COVID-19 cases demonstrates that the virus knows no bounds on who it affects, it has become evident that this virus has a disproportionate impact on communities of color. The same goes for predatory loans. In states where payday loans are legal, stores are heavily concentrated in black and Latino communities, stripping precious wealth from places that are already in trouble.

Auto title lending stores follow the same pattern. A 2018 car title lending location mapping by Tucson’s Center for Economic Integrity found that high-cost lenders are much more likely to be located in low-income neighborhoods of color. In Arizona alone, these predatory lenders drain $ 255 million a year from our most vulnerable neighbors.

In the event of a pandemic, defending this legalized usurious loan exposes people of color to economic catastrophe on top of the worst health problems they already face.

As a society, we have a responsibility to be aware of how devastating securities lending can be for the individuals, families and communities of color who are most often the targets of unscrupulous lenders. Aside from television commercials and billboards, a small, triple-digit interest rate loan does not offer relief from financial hardship. These types of loans take a precarious financial situation and turn it into an absolute disaster.

Auto title lenders continue to file collection cases against their borrowers despite the emergency declared by Governor Ducey on March 11. In a single day last week (July 15), Checkmate Express filed 15 new cases against borrowers in the Maricopa County Court of Justice, indicating that these loans are unaffordable and borrowers are in trouble. The effects of small, high-cost loans are creating additional damage and widening health and wealth gaps, especially now in times of a pandemic.

Securities loans are predatory and designed in such a way that the borrower is trapped in a never-ending cycle of debt. The Consumer Financial Protection Bureau has found that one in five borrowers have repossessed their vehicles and that two-thirds of lender volume comes from borrowers stranded in seven or more loans.

The majority of securities lending companies in Arizona are regional or national chains, not family businesses. At least 18 approved securities lenders are headquartered outside of Arizona, representing 25% of businesses and 59% of approved sites offering loans in Arizona.

There are at least six licensed companies out of state that offer loans online without providing physical locations in Arizona, with the entire transaction handled electronically. In some cases, consumers apply for loans online, submit documents, and then take out loans with local agents.

Now more than ever, consumers need to be protected from these largely out-of-state financial predators, so that legitimate small lenders who meet Arizona’s 36% APR small consumer loan limit or less can arise in a fair and equitable market. .

Individuals and families do not need to access predatory products. What we need is for the state to deal with the issue of unemployment insurance, access to food, medical care, broadband, telehealth and other issues. urgent economic issues. And we need to strengthen consumer protections to guard against exploitation, including repealing the legal exclusion that allows triple-digit interest rate car title loans. This is the role of government during a crisis.

Arizonans are resourceful, resilient, and able to navigate just about anything. Loan programs that prey on people when they are most vulnerable on the pretext of being useful during a pandemic is a bit like a wolf parading in sheep’s clothing. Only those who profit from it agree with the trick. The rest of Arizona voters see it for what it is — wear and tear.

Editor’s Note: Kelly Griffith is the Executive Director of the Arizona Center for Economic Integrity and Cynthia Zwick is the Executive Director of Wildfire.

How to choose a lender for car title loans

Are you looking for any type of loan or financing? You need to find the right lender in order to enjoy peace of mind and reassurance. You will find many different loan products and lenders these days. However, your situation will determine the types of loans you are eligible for, such as car title loans.

If you have a low income and a bad credit score, you may find that your options for getting a loan are much more limited. Nevertheless, there are options available. Although they may be limited, you should always ensure that you choose the right lender.

One of the options you can consider if you own your vehicle and it is registered in your name is a car title loan. With California car title loans, you can benefit from a simple application process and a better chance of getting the money you need compared to a traditional lender. When it comes to choosing the right lender, you need to consider various factors. We will look at some of them in this article.

Key points you need to keep in mind

When it comes to finding the right lender for your loan, there are a few key factors you need to keep in mind to help you make the right decision.

The borrowing percentage

When you take out a car title loan, you can borrow up to a maximum percentage of the value of the vehicle. This percentage may vary from one lender to another. You should make sure to check what it is before deciding which lender to use.

This will determine how much you can borrow against your car, so you can see if it will get you the amount of money you need.

Interest rates and conditions

Another important thing you need to look into is the interest rates charged and the terms of the loan, which can also vary from provider to provider. By checking these details, you can ensure that you are getting a fair deal and that the loan is both affordable and suitable for your needs.

Ease of application

The ease of applying for car title loans is another thing you might want to consider. It can save you a lot of time and hassle.

With some providers, you can do the whole process online and from the comfort of your own home. It saves you a lot of stress and frustration.

Speed ​​of payment

For many people, the speed of payment will also be critical. Some may need access to cash quickly for a financial emergency, so it is worth checking how quickly payment is usually made to the applicant. You can then be sure to get the money quickly.

Here are some of the essential things to consider when choosing a car title loan provider.

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Why are title loans better financial options than traditional loans?

Whenever you have financial needs, you start tapping into the best financial solutions. The two main options you can make the most of are quick title loans or traditional car loans. It’s time to find out why people only opt for the first option.

Traditional Car Loan Vs. Modern Car Title Loan

You should clarify at this point that both options are classified under a secured loan. You use your car or its title as collateral to get a loan. However, there are certain things that make a quick title loan the best financial choice for a person.

Less paperwork – Consider getting a loan from a traditional channel, i.e. a bank, and you will start to imagine all those documents you need to bring there. Getting a loan with a car title, however, is quite convenient, as you don’t have to organize a lot of paperwork. The first document is the original unlicensed car title and the second document is proof of income. The purpose of obtaining this proof is to understand the debt-to-income ratio. Every lender tries to play it safe. Therefore, he is interested whether you can manage the monthly loan payment or not. You may be surprised to learn that many lenders are willing to give you a loan against your car title, even when you are unemployed.

Loan Approval Speed ​​- Everyone knows the frustration of traditional lending. You will have to wait for weeks to get loan approval even if you meet all the conditions. The bank does not grant loans quickly. They take time, and you have to show some understanding of the ins and outs of the loan approval process. What if you can’t wait that long? In case of immediate cash needs, fast title loans work as great lending solutions for individuals. You can expect to get the loan amount on the same day if you choose the best title loan provider.

No need for co-signers – If you do not have a good credit rating and a good credit score, then you start looking for a consignee, and finding it is not so easy. The bank requires a consignee, so when you cannot pay the loan amount, that person will pay the amount you owe the bank. However, fast title loans do not require a co-signer. The lender relies only on the collateral in case of risk of default.

No more credit checks – In a traditional loan, your creditworthiness plays a central role. The bank will perform a credit check to get an idea of ​​your credit score. Your creditworthiness will decide whether the auto loan will be approved or not. Contrary to this, fast securities lending do not require a credit check. They have little or no impact on your score and credit rating. Regardless of your credit score, a lender is there to help. This means that your bad credit will not be an obstacle for you.


People opt for fast title loans because they can avoid the hassle of traditional loans. There is no need to go through the loan approval anxiety of waiting to receive a loan approval call from a conventional lender.

The benefits of securities lending

When it comes to getting financing, there are all kinds of solutions these days you can turn to. From credit cards and personal loans from High Street lenders to loans secured by your home, you can find different solutions to meet a wide range of needs and circumstances. Another option available is a title loan, which is a form of secured financing.

Title loans are loans secured against your vehicle and to be eligible you must own a vehicle in your name. Lenders can offer a loan based on the value of the vehicle, and borrowers can then borrow up to a specified percentage of that value. Many people turn to securities lending as a means of accessing quick cash, and these loans come with a range of benefits. In this article, we’ll take a look at some of the main benefits of securities lending.

What are the main advantages of securities lending?

Title lending has become increasingly popular in recent years for a number of reasons. These loans offer a range of benefits, some of which are:

Bad credit won’t hold you back

One of the things that often holds people back when it comes to getting a loan is their credit history and mark. If you have a low credit score or a damaged history, you may find that you cannot access any traditional form of financing. However, with an auto title loan, the decision is not based on your credit history or your current credit score. This makes these loans ideal for those who do not have a good credit rating.

You get the money fast

With some forms of funding, you have to wait a long time for your application to be processed. You may also need to spend time sending documents and waiting for information. Also, when you are approved, you may have another wait in front of you before you get the money. With securities lending, you can get the money you need quickly once approved, and often you can get it the same day. This is perfect for those who need the cash quickly.

The application process is simple

Another advantage of these loans is that the application process is very simple which means that you can avoid stress and hassle. If you do it online, you can process the request with speed, ease, and convenience. This can save you a lot of time and means you can do it all from the comfort and privacy of your own home.

You can keep your car

When you take out a title loan, you don’t have to give up your vehicle until the loan is paid off, which is another plus. You can continue to drive and use your vehicle as long as the loan is still secured.

Here are some of the many benefits you can expect when taking out a title loan.

Max Cash ™ Title Loans Analyzes the Challenges of the COVID-19 Effect on the Securities Lending Industry

TEMPE, Arizona., April 28, 2020 / PRNewswire / – Title Deed Lenders United States are currently suffering a decline of 69% and up to 90% in other parts of the country. Pawn shops are experiencing unprecedented growth as Americans attempt to sell property for cash.

Due to this car title loan, lenders have adapted to everything online, but you will still have to use your cell phone to take pictures. Online title lending is here to stay. “Lenders are changing to help people comply with stay-at-home orders and avoid contact,” said Fred winchar, president of Bolt Loans and A maximum of money securities lending. “Securities lenders go out of their way to lend money, but they have challenges they’ve never seen before.”

Typically, title deed lenders generate income from individuals making payments on their loan, as well as occasionally repossessing vehicles from deferred loans. However, most lenders prefer to derive the majority of their income through payments, as the repossession of the vehicle comes with other extended expenses such as storage, security or disposal of the vehicle, if applicable. . Also seeking to avoid reputational damage, most title lenders are more reluctant than ever to repossess vehicles.

People who can usually turn to title loans as a practical short-term financial emergency solution can no longer receive approval because they no longer have valid proof of income. Since the ability to repay the loan is a documented requirement for title loan approval, the spike in unemployed Americans has made it difficult for the title lending industry to accept loan applicants at its usual rate. Property title lenders want to lend. This is what they do. They are not in the business of giving money away without it coming back at some point.

Along with approval rates, loan amounts financed have also declined significantly for the securities lending industry. According to Fred winchar, President of Max Cash ™ Title Loans, “The average loan amount is now around $ 900, whereas before the average was around $ 3,500. “The current combination of low approval rates and low amounts funded has created a cash flow problem for many securities lenders, leaving them with limited income to give back to the public through additional loans. companies have closed their doors for good, many more are struggling to find qualified customers and stay afloat financially.

In response to this economic downturn in the industry, securities lenders still in business have had to find ways to adapt. Since lenders must Something rather than nothing to stay in business, small loans have become essential to sustaining the securities lending industry during this time. Some lenders also give “micro-loans”, which are as low as $ 100 and make the process all online. Other lenders have started working with banks to create a new loan product where the funding is held by the bank rather than backed by the securities lender that handles the loan.

Other auto title loan lenders have attempted to alleviate the problem by implementing a process in which the monthly payment decreases due to a continually falling interest rate. Some of these types of loans have the ability to drop to some of the lowest interest rates the securities lending industry has ever seen. In addition, some auto securities lenders only approve applicants who are extremely low risk, which is not the typical customer base typically served by the securities lending industry. These low risk, limited candidates now have the opportunity to profit from falling interest rates and potentially benefit from industry difficulties.

The securities lending industry recently adopted procedures to make doing business as secure as possible, such as online applications, processing and payments, lenders are collectively struggling to remain financially stable in these unprecedented times.

As always, Max Cash ™ Title Loans encourages you, friends, and family to stay safe and healthy by complying with the CDC’s recommendations to stay home and practice social distancing.

Stay secure, with your family of Max Cash ™ securities lending, https://www.maxcashtitleloans.com/

A maximum of money Securities lending
A maximum of money Title Loans, owned by Tradition Media Group, LLC, is a proprietary agency that uses an extensive network of lenders to help clients access securities lending services. A maximum of money Title Loans manages the processing of securities lending and the execution of sales to clients and can act as a broker for loans on a case-by-case basis.

CONTACT: Fred winchar, 1-877-958-1146, [email protected]

SOURCE Tradition Media Group

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What you should be aware of about payday loans and auto title loans

If the coronavirus epidemic is causing financial stress there is no one else to blame. Many millions of Americans have lost all or a portion of their earnings because they are unable to work. Federal Economic Impact Payouts could aid, but some might look at other options to obtain cash for a short time. You could go to these guys think about options such as the payday loan or car title loan, which could be very costly. This is what you should be aware of.

Loans for payday

The payday loan is made for a short period. In some cases, it is only two weeks. When you apply for payday loans, you provide the lender with an individual payment of the sum you wish to borrow and any charges the lender charges you. The lender pays you in cash charges. The next payday you have to pay the lender the amount borrowed in addition to fees in cash.

Payday loans can be extremely costly. Here’s an example :

  • You’re looking to take out a loan of $500. The interest is $75. You must give the lender an amount of $ 575 in cash.
  • The lender pays you $500 in cash. The lender keeps your pay stub.
  • When the time comes to pay back the lender usually in two weeks time, must pay them $575. The lender will return your check to you.
  • The bottom line is that you have paid $ 75 to borrow 500 dollars for two weeks.

Auto title loan

A title loan for cars can also be a loan for a limited duration. They usually last only 30 days. For an auto title loan, you grant the lender the title to your car. The lender will give you money and hold the title for your vehicle. In the event of repaying the loan, you have to pay the lender the amount borrowed in addition to charges. Title loans for cars aren’t cheap. Here’s an example of :

  • You’d like to take out a loan of $1,000 in 30 consecutive days.
  • The fee is 25 The rate is 25. For borrowing $1,000 the amount is $ 250.
  • When you’re due to pay your lender in the next 30 days, must pay them $1250.

Title loans for cars can also be extremely risky. If you don’t repay the amount you owe the lender, could seize your vehicle from you. The lender could decide to sell it and keep the proceeds and leave you without a vehicle. This video shows how this could occur.

Other methods to make money

Auto Title loans are extremely costly. You may want to consider other options for borrowing cash, like taking out a loan through banks or credit unions.

The majority of loans come with the annual percentage rate, also known as APR. The APR is the amount it will cost you to borrow money over the course of one year. If you are offered an advance loan or payday loan advance from a lender, they will provide you with the APR as well as the amount to repay the loan. The loan amount is in USD.

Here’s a look at the cost of a loan, which is 500 dollars for a year.

What happens if I’m serving in or with the army?

If you’re serving in the military, the law safeguards you and your family members. The law restricts the APR for a variety of credit, such as payday loans as well as auto title loans, personal loans, as well as credit cards to 36 percent. In addition, lenders must provide you with the information you need regarding your rights as well as the price for the loan. The military also offers financial assistance and can help you control your money.

Other options in case you are unable to pay your bills

  • Request the time. Ask the companies to whom you owe money for additional time to pay the amount.
  • Get assistance. A credit counselor could be able to assist you to deal with your credit.
  • Make an application in the event of unemployment. Consider applying for unemployment insurance benefits through your state. Find out more about the benefits and whether you’re eligible through the Ministry of Labor website.

Important Things To Know About San Francisco Car Title Loans

San Francisco is known to be a culturally wealthy and progressive city that has been highly acclaimed as one of the best financial centers in the United States today. Even though San Francisco is a beautiful city that boasts of fun and exhilarating destinations, it could be quite a stressful and demanding place for people living here who are increasingly faced with costly and unforeseen expenses. Above all, with the current health and economic crisis of COVID-19, you may be looking for some kind of help. According to reports, the coronavirus could trigger a severe recession or slowdown in the United States.

According to https://edition.cnn.com, auto title loans were designed for anyone looking for quick cash to pay bills, manage debts, or deal with an existing health and financial emergency.

According to https://edition.cnn.com, as stores, restaurants, factories and airlines close around the world, from Madrid and Paris to New York and San Francisco, economists constantly warn that a worldwide recession is no longer an imminent threat , it is there.

If you own a car, you can avail a very quick and easy car title loan. However, you might have to pay quite high fees or if you default on your payments, you could risk losing your vehicles. Car title loans are for people who need quick cash to pay bills, manage debts, or deal with today’s emergency.

Here are some important points to keep in mind while availing a car title loan.

To get a loan, you must own your vehicle or have equity in the car

Auto Title Lending San Francisco are supposed to be a secured loan which considers your vehicle as collateral. Auto title loans would range from $ 100 to about $ 5,500, or about 25 to 50% of the value of your vehicle. The term of the loan seems to be quite short usually only 15 to around 30 days. Even though it is called a car title loan, you can get this cash advance using your trucks or motorcycles or any other vehicle. You would need a clear title to qualify for this loan. You need to provide a photo of your car, proof of insurance, photo ID, and proof of income to qualify for this loan. If you get a car title loan approval, you will have to immediately assign the title of your car to the lender in exchange for your loan.

Car Title Loans Could Mean High Fees Or High Interest Rates

Lenders could charge almost 25% of the total loan amount each month to fund your loan. For example, to get only a 30-day loan for $ 1,000, your fee could be 25% of the amount. Therefore, you have to pay back $ 1,250 and other additional charges to pay off the car title loan at the end of the month. This would translate to an APR of over 300%. It seems pretty high. However, you simply cannot interfere with the convenience and speed with which the loan is approved and processed.


If you are in a crisis and cannot repay the loan, you may have to give up the car. The lender would be obligated to repossess your vehicle in such circumstances. Know your facts before you opt for this. But remember that your credit history is irrelevant and you could qualify for this loan with even a bad or no credit history.

Car Title Loans: Three Things You Should Know

Car title loans are specially designed for those who need quick cash to pay bills, face an emergency, or manage debt. If you owe or own a certain vehicle very little, an auto title loan – also known as a “quick auto loan” – is fairly easy to obtain. However, quick and easy is sometimes too good to be trusted. You will end up paying high fees for this type of loan, and losing your car is also a risk.

Before you go with a decent car title loan, here are three things you need to know.

To start

  1. If you want to get a car Miami securities lending, you must own your car or at least have equity.

In other words, an auto title loan is basically a small secured loan that often uses your car as collateral. Typically, car title loans range from $ 100 to $ 5,500, which is usually an amount equal to 25 to 50% of the value of the car. Often the loan term is short; only 15 or 30 days. And although it is known as a “car” title loan, this type of loan also applies to other vehicles, such as motorcycles and trucks.

If you want to get a car title loan, the requirements are clear title – that is, 100% ownership of the vehicle, without any liens – or some equity in your car.

Common question

What is equity?

Equity is the value of the asset, such as a house or a car, minus any debt you owe on that particular asset.

“Title pawns”, “title pledges” or “pink coupon loans” are other common names for car title loans. The term “pink slip” essentially comes from the pink paper that California car titles were once printed on.

Typically, the lender will not only want to see your car title, but also your proof of insurance, photo ID, and your car.

When you get approval for a particular car loan, you issue title to your car to your lender in exchange for that loan. It is until you pay off the loan that you will get your title back.

  1. Car title loans have high interest rates and fees

When it comes to an auto title loan, it is very common for lenders to charge around 25% of the loan amount each month to fund the loan. If you get a 30 day car title loan for around $ 1,000, for example, the fee is 25% ($ 250), and you will need to incur $ 1,250, plus any additional costs, which will pay off your loan. at the end of the month .

This translates into an APR, or annual percentage rate, of over 300%. Generally speaking, this is significantly higher than many other forms of credit, such as credit cards. If you get an auto title loan, your lender should tell you the APR and the overall cost of the loan. Indeed, you can compare this information with that of other lenders to help you find the offer that is best for you.

  1. You could lose your car if you don’t pay off your car title loan

When you get an auto title loan and you don’t pay back the specific amount you borrowed, along with all fees, your lender can roll over your loan for a new one. Once you’ve done that, you’ll add even more interest and fees to the amount you renew.

For example, you might have a loan of $ 500 and fees of $ 125. You are not able to repay the full amount after the 30 day period. You decide to pay the $ 125 fee and then transfer the original $ 500 into a new loan with a 25% fee.

When you pay off your new loan, you’ll have paid an overall cost of $ 250 in fees out of the $ 500 you originally borrowed. When you keep renewing your loan, you might find yourself in a cycle of additional charges that makes paying the lender a daunting task.

The lender could in fact take back possession of your car if you find yourself in a situation where you are unable to repay the debt. And you could end up paying even more fees to recover the vehicle, as well as the overdue amount.

Simply put, if you are unable to resolve this issue, then you will have to look for (and pay for) other means of transportation.

Why Car Title Loans Are A Bad Idea

(AOL Autos) – Cash advances are not a new concept in the brand of American capitalism. A lot of people have seen the ads with a guy barking, “Bad credit, no credit, no problem! Or, “Don’t worry about the credit, I own the bank!”

In addition to the <a class=high interest rates, these auto title loans usually include a number of fees that add up quickly.” width=”292″ height=”219″ border=”0″>

In addition to the high interest rates, these auto title loans usually include a number of fees that add up quickly.

Anytime a guy tells you he owns the bank, run.

Even though these lenders have been around for a while, signing your car for a high interest loan has become a serious financial problem.

For those of you who are not familiar with the concept of auto title loans, allow us to explain.

Sometimes the best of us are strapped for cash; we may not have credit or bad credit (as they say in the ads), which makes it difficult for us to get small loans from a bank or some other more traditional way.

A title loan offers you money from the lender, in return you sign the title of your paid car to secure the loan. Typically, these loans are due in full 30 days later. There is no credit check and only a minimum income check.

It sounds simple enough, but borrowing in these places can lead to repossession of your car and a lot of financial problems.

Interest rate that makes credit card companies blush

Auto title loans have been lumped into the category of “predatory loans” by many consumers. Nonprofits such as the Consumer Federation of America (CFA) and the Center for Responsible Lending have published detailed reports describing some of the securities lending issues the public should be wary of.

One of the biggest issues with these loans is the interest rate. Many people dislike credit card interest rates, which average between the mid to upper teenage years for most Americans. The interest rates on car title loans make complaining about credit rates seem ridiculous.

Auto title lenders are a different category from credit card companies or banks and circumvent usury laws. Thus, title lenders are able to charge three-digit Annual Percentage Rates (APRs). Yes, three digits. It is no exaggeration to see 250% APR and more on these car tile loans and only a handful of states have passed strict laws that prohibit sky-high percentage rates.

Even if your credit card company charges you a high 25% APR interest, that’s nothing compared to car title loans. AOL Autos: the most popular used cars

Under federal law, property title lenders must disclose interest rates in annual percentage terms. If you need to get a title loan make sure they don’t just give you a monthly percentage rate quote, they have to give it to you as an APR. If they’re not clear on rates, which many may be, just know that a 25% monthly rate equals 300% APR.

Fees and interest only

In addition to the high interest rates, these auto title loans usually include a number of fees that add up quickly. These include processing fees, document fees, late fees, setup fees, and lien fees. AOL Autos: the safest cars

Sometimes there is also a roadside assistance program that borrowers can purchase for a small fee. Some lenders have even gone so far as to make roadside assistance compulsory. The cost of all of these fees can range from $ 80 to $ 115, even for a $ 500 loan.

Most of these fees are legal, except for one that lenders sometimes charge, the repossession fee. Lenders aren’t allowed to charge you for the trade-in of your vehicle, but some still do. AOL Autos: the best vans

As if high interest rates and a mountain of fees weren’t enough, lenders also offer borrowers the option of paying only interest for a set period of time. In these cases, the loans are usually put in place for a longer period (compared to the usual 30 days) and the borrower can only pay the interest on the loan.

These types of payments are called “balloon payments” where the borrower pays the interest on the loan each month and at the end of the term he still owes the full loan amount.

The CFA reported that a woman paid $ 400 per month for seven months with an interest-only payment deadline on a $ 3,000 loan. After paying $ 2,800 in interest, she still owed the original $ 3,000 by month eight. AOL Autos: The Most Popular Crossovers

Reversal and repossession

If you think that most of the people who take out these loans will pay them off in full after a month, think again. Due to the high interest rates and the fact that these lenders cater to low income borrowers, many people are not able to repay their loans within 30 days. This is called the “renewal” of the loan.

The terms of these loans are designed to keep borrowers in a cycle of indebtedness and bring customers to the brink of recovery or actual recovery. Not being able to pay off the original loan and then renew it the next month costs borrowers even more money in interest, on top of the original amount they have already borrowed. AOL Autos: Used luxury cars

Let’s talk about repossession for a minute. The CFA reported that of those polled in their 2004 study, 75% had to give title lenders a copy of their car keys. Some companies started the cars to see if they worked and took photos of the vehicle even before a customer filled out the loan application.

An Arizona-based company said it has installed GPS systems on cars so it can track cars and turn them off remotely if they don’t receive payment on time. It might be an extreme case, but these lenders take a customer’s pledge signing very seriously. If you can’t pay, they’ll come and pick you up and your car.

The concerns about repossessing your car are obvious. How do you get to work, drop the kids off at school, go shopping or go out on weekends without a car? As if those scenarios weren’t bad enough, owning a car can be some people’s biggest financial asset. If the car gets swept away, so does the money it was worth.

Some states have laws that require lenders to pay you the difference on the loan after a lender repossesses and sells your car, but some do not. It is possible to default on the loan and not get money back for your car, even if you only borrowed a few hundred dollars.

This happens because auto title loans are also over-secured. Typically, the maximum amount most lenders will give you is 25-50% of your car’s actual value. However, if you can’t pay off the loan, they might be able to sell your car and keep 100% of the profits. Some lenders will not take possession of a vehicle but instead sue the customer for the money. They then add legal fees and finance charges to the existing loan amount.


Many auto title lenders defend their business practices by saying that they offer loans to people who otherwise could not get financial assistance. While this may be partly true, giving away one of your most valuable assets for several hundred dollars isn’t the only option.

Some credit unions, like in North Carolina, started providing low-interest loans of around 12% APR, a fixed 31-day repayment plan (to avoid rolling over a loan), and implemented a direct deposit from the borrower’s paycheck. so that the loans are repaid in full.

Other options may be cash advances on your employer’s paychecks, cash advances on credit cards, emergency community assistance, small consumer loans, or borrowing from friends or family. family members.

If you are considering a car title loan, check out these alternative options and read the information for yourself at www.responsiblelending.org or www.consumerfed.org. If you still need to sell your car for cash, educate yourself about the decision and the possible repercussions of these types of loans.

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Everything on Cars and automotive design • Interest rates

Consumer advocacy group hopes elected officials will close ‘loophole’ car title loans | News

ATLANTA (CBS46) — A consumer advocacy group is pushing for Georgian lawmakers to pass a law the group says will prevent lenders from taking advantage of consumers.

A representative from Georgia Watch, a statewide consumer advocacy group, testified Monday at the Georgia State Capitol to urge lawmakers to pass the Motor Vehicle Title Loan Act, SB329.

According to Georgia Watch, the law, if enacted, will close a loophole and protect consumers from high-interest car title loans.

“Some smaller lenders prey on financially insecure consumers by offering fast, high-interest cash loans that trap consumers in a cycle of debt.

Georgia’s usury law caps the interest rate on most small consumer loans, but a legal loophole allows car titles to be ‘pledged’ at interest rates of up to 300% , rates that would otherwise be considered usurious,” according to a press release from the advocacy group.

Georgia Watch reported that closing the legal loophole would protect Georgians by:

• Ensure that money loaned in exchange for a car title is treated as a “loan” rather than a “pawn”

• Align securities lending with current small loan industry standards

• Level the playing field for Georgians by leveling title loans across the state.

Georgia senator seeks to cap interest rates on car title loans

A proposed bill in the Georgia Senate would cap the interest rate on car title loans and limit the amount lenders could collect in the event of default.

Senate Bill 329 was introduced in late January by state senators Randy Robertson, Chuck Hufstetler, Zahra Karinshak, Ed Harbison and Sheikh Rahman. The bill is bipartisan as Robertson and Hufstetler are Republicans and Karinshak, Harbison and Rahman are all Democrats.

The lengthy 32-page bill specifically seeks to cap interest rates at 36% per annum for any car title loan issued in the Peach State. Furthermore, it seeks to prohibit the lender from continuing to collect interest on the loan after the sixtieth day after the borrower has not made a monthly payment by the due date “unless the borrower conceals the motor vehicle”.

The legislation also outlines how lenders disclose title loan parameters.

Other consumer loans of a similar nature are capped by the state and none currently have rates higher than 60%, but car title loans fall into a different category alongside pawned items. These are subject to interest rates of 25% per month for the first 90 days, then 12.5% ​​per month every 30 days thereafter, depending on North West Georgia News. Consumer advocates in favor of the bill say the type of loans are predatory in nature and prey on those in need. They even went so far as to call car title loans a “loophole” in the title pawn industry.

Robertson said Calhoun’s time that he is pushing the measure because of a constituent in his district, which encompasses Columbus, whose “elderly father pawned the title to his car to pay his utility bills and then fell into a hole because of increasing monthly payments of the 166% interest rate of the loan.” He also told the newspaper that his bill will “alleviate generational poverty” and “empty jails and jails.”

To help push the initiative through, the bill was combined with another initiative which includes transferring the regulation of consumer loans like these to the Ministry of Banking and Finance from the current Ministry of Insurance. . This is something that has already been factored into Kemp’s proposed budget for fiscal year 2021.

The measure was assigned to the Senate Finance Committee, of which co-sponsor Hufstetler is the chairman. He hasn’t had a hearing yet.

You can read the 32-page bill in full here.


Jessica Szilagyi is a former statewide contributor for AllOnGeorgia.com.

Payday loans and car titles need reform

By Rabbi Gary S. Creditor

When my wife and I applied for our first credit card, I eagerly waited for it to arrive. When we applied for our first car loan, I had no doubts that we would be approved. When we applied for our mortgage, I was also certain, but amazed at the amount of paperwork involved and the amount of information required. Never in our lives have we needed short-term loans or had to give title to our car as security for a loan.

We have been blessed.

But for so many Virginians, their financial reality makes it impossible to get the loans and mortgages I received, so they have to go to the nearest payday lender. Then they often find themselves trapped in a terrible scenario from which there is almost no escape. In the Commonwealth, payday and car title lenders can charge interest rates of 200 and 300%. Although borrowers intend to take them as short-term loans to tide them over in the event of an emergency cash crunch, it often doesn’t turn out that way.

People who already struggle to pay their grocery bills or keep the lights on end up paying more interest and fees than the original amount they borrowed. For example, in Virginia, the average car title loan is $1,116 and the average reimbursement cost is $2,700. Virginia also has one of the highest car foreclosure rates in the country. Those in the weakest financial situation often sink deeper into poverty. For those who lose their car titles lose their means of transport to work in order to earn money to repay loans! Virginia has the dubious distinction of having one of the highest car repossession rates on title loans in the country because our laws have unusually weak consumer protections.

Any cursory reading of Scripture, especially Leviticus and Deuteronomy, finds numerous commandments whose ultimate goal is the alleviation of poverty and the elevation of the poor to equitable financial status. Just substitute current terminology for agricultural terms. While the main objective may be utopian, namely to eliminate poverty completely, in the meantime; The scriptures compel us to care for and care for the poor, the needy, and those unfamiliar with the intricacies of modern finances.

How clear are the following verses: “Do not put a stumbling block before the blind”, [Leviticus 19:14] and “Cursed be he who leads the blind astray.” [Deuteronomy 27:18]. “Don’t steal from the poor because he is poor! [Proverbs 22:22]. While scripture was composed centuries ago, its words echo with force and urgency to our legislators in Virginia. They must regulate this industry and put an end to these practices that can cause financial ruin and lead to eviction and homelessness.

The countless religious communities of the Commonwealth of Virginia can find endless quotations in their sacred texts that echo the words of Leviticus, Deuteronomy and Proverbs. In unity, religious communities raise this issue and together demand that the General Assembly adopt laws to remedy this situation.

As a member of the Virginia Interfaith Center for Public Policy, I thought we were successful in championing this cause. In 2008, certain limits on payday loans were adopted. But lenders quickly turned to offering “open credit,” like a credit card but with 300% interest, exploiting another part of Virginia’s legal code where they aren’t required to obtain a license. and can charge unlimited rates. Virginia is one of six states whose lending laws are so weak that payday lenders operate that way. Our state legislators have attempted reforms over the years, but lenders have successfully blocked or circumvented the rules, so now we must redouble our efforts and demands.

While our economy appears to be thriving with low unemployment rates and a strong stock market, the truth is that the gap between the weakest members of our society and those with the highest incomes has widened to epic. Vulnerable people are more vulnerable than ever. I realize that there will always be people who need access to immediate capital and liquidity and companies who will accept different levels of risk to make it available. These lenders don’t need to rip people off with such usurious rates.

Evidence from other states shows that carefully crafted laws can ensure strong safeguards for these businesses while allowing widespread access to lower-cost credit. In fact, some of the same companies operating in Virginia today charge up to 300% interest charge less in other states. Why should our laws allow our citizens to be exploited? The scriptures command: “There shall be one law for the citizen and for the stranger who dwells among you. [Exodus 12:49]

The possibility of a fair market where all loans have affordable payments, reasonable prices and strong consumer protections is already a reality in other states. It’s a goal that church leaders in Virginia have long been calling for, and the time has come.

The Virginia Interfaith Center for Public Policy and the Virginia Poverty Law Center are working with partners and lawmakers to take action to protect consumers rather than predatory lenders. Bills demanding comprehensive predatory lending reforms have been introduced by Senator Mamie Locke (SB421) and Delegate Lamont Bagby (HB789) and proceed towards the passage.

This legislation will finally fix the problem and put money in the pockets of Virginia families who live paycheck to paycheck. Faith communities across the state are being mobilized to make sure they do.

Scripture, respected and honored by all religious traditions, requires: “Justice, justice you shall pursue [Deuteronomy 16:20].” The time has come. The Virginia General Assembly is the venue.

Rabbi Gary Creditor is a board member of the Virginia Interfaith Center for Public Policy and Rabbi Emeritus of Temple Beth-El in Richmond. ([email protected]).

Arizona car title loans must be capped to save the poor

Opinion: As pastors, we care for the vulnerable. That’s why we support Arizona’s Fair Lending Act, which limits interest on title loans to 36%.

In this season, Christians observe Advent – awaiting the arrival of the One we believe has come to redeem the earth. It is a moment of joy, yes.

But it is also a time of reflection on the evils of the world. We walk in the darkness of injustice, war, poverty and greed.

As pastors, we are disturbed when we see vulnerable congregants being preyed upon, including in their financial dealings.

This is why we support the Arizona Fair Lending Lawa ballot initiative effort that would lower the interest rate on car title loans, so that title lending companies could charge no more than 36% annual interest.

Loans charge borrowers 200% interest

When families are in financial trouble, they are vulnerable to the promise of “quick cash” from car title and other predatory lenders as a financial life raft. Unfortunately, the life raft often turns out to be an anchor, adding to borrowers’ debts.

Too often, this raft weighs us down too. With interest rates of up to 204%, our already strained charitable funds are often stretched even harder trying to help our brothers and sisters pay off these disastrous loans.

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In 2008, Arizona voted to ban payday loans, which defrauded families with exorbitant interest rates, sometimes over 200% per year. At that time, about half of the companies in the payday loan industry in Arizona simply replaced their products with vehicle title loans, so they could continue to charge families those exorbitant interest rates.

Today in Arizona, securities lenders are making mega profits by charging borrowers interest rates of up to 200%. Studies show that 1 in 5 borrowers end up losing their car when they can’t pay. Families on fixed incomes are often trapped in debt. And churches like ours need to step in to help people get back on their feet.

Do not exploit the poor for profit

What do the scriptures tell us about debt and loan?

In Proverbs 14:31 we are advised, “Those who oppress the poor insult their creator, but helping the poor honors him.”

Proverbs 22:22 goes on to instruct us, “Do not steal from the poor because they are poor.

The car title loan does just that. It targets the needy with loans they cannot afford for the benefit of the wealthy.

Securities lending benefits the poor and makes debt repayment almost impossible. God created mankind in his image and bestowed dignity and value on every human being. Predatory lending places individuals in a perpetual state of indebtedness, all for reasons of personal gain.

Making a profit is not unethical; however, making extreme profit at the expense of the weak and vulnerable is condemned by Jesus – and human decency in general.

As Christ is the light and the hope of the world, we must be the light of those who suffer from this darkness. We must end this exploitation of the poor and ensure that all Arizonans can live in dignity.

We pray that God will fill us with wisdom and compassion as Arizonans vote. We humbly ask that you support the Arizona Fair Lending Act.

Reverend Abigail Conley is pastor of Chalice Christian Church Disciples of Christ in Gilbert and Randy Reynolds is founder and executive director of Community Renewal in Tucson, which mobilizes the faith community on social and other issues. Contact them at [email protected] and [email protected]

Program helps Maricopa County residents repay auto-title loans

When Rakesha Hill’s car broke down, she didn’t have $700 to pay a mechanic. The mother of three from Mesa earns a modest salary working for a charity that helps homeless families.

So, in a pinch, Hill took out a car title loan.

“It was the only option I had at the time,” she said.

Hill, 39, discovered what many consumers do. The interest rate was so high that she had difficulty repaying the loan.

“I was already for a year paying ‘$100 a month,’ Hill said, ‘and nothing was going into the capital.’

Title loans are a common option

Consumers often turn to vehicle title loans when an unexpected emergency arises and they are low on cash.

Four in 10 Americans said they would struggle to cover a surprise $400 expense, according to a Federal Reserve study last year. A Bankrate.com poll it is estimated that about two in 10 adults have no emergency savings.

But interest rates on home loans can be huge, reaching 204% per year, according to the Consumer Federation of America and Southwest Center for Economic Integrity.

People can shell out two to three times the amount they borrowed and not come close to loan satisfaction. And if a borrower defaults, the lender can repossess the vehicle and charge additional fees.

The program gives a helping hand to borrowers

Hill felt stuck with her title loan.

“It’s like a cycle. You just pay them enough so they don’t harass you,” she said.

Then Hill heard about a program that might help.

The program, called lend a handallows qualified Maricopa County residents to borrow up to $4,000 from MariSol Federal Credit Union to pay off a title loan.

The annual interest rate on the new loan, at 15%, is well below that of most title loans. Participants can also receive debt counseling from a separate Phoenix-based nonprofit, Take Charge America, and set up a savings plan so they can get back to financial health.

The Arizona Community Foundation and the Phoenix Industrial Development Authority support the program.

Hill said Lend a Hand made it easy for her to get out of debt.

“(The loan) was so affordable that I was able to pay it off in six months,” Hill said. “If it hadn’t been for the program, I would still be paying off (the title loan) now or I would have had my car repossessed.”

Some unhappy with the program

Lend a Hand is not for everyone.

People with multiple title loans or who are extremely in debt are unlikely to be approved for the loan, said MariSol Federal Credit Union CEO Robin Romano.

“It’s a great tool for those in the early stages of being trapped,” she said. “The vast majority of people we have to turn away…they owe so much more than they can repay, it’s like putting a bandage on a gushing wound.”

But Romano urged everyone to apply.

“Take the first step and apply. It doesn’t hurt to go through the board, and it doesn’t hurt for us to take a look,” she said.

A participant said The Arizona Republic he was unhappy with the program.

An 80-year-old Phoenix charter school teacher took out a car title loan to pay for his wife’s breast cancer treatments.

After applying for the Lend a Hand program, he said he felt obligated to accept Take Charge America’s debt plan even though he was not approved for the MariSol Federal Credit Union loan.

The organizations said they would review their application materials and interactions with consumers to improve communication about the two separate programs.

How the program works

People who apply for Lend a Hand will first speak with a credit counselor from Take Charge America.

The Phoenix nonprofit can create a monthly budget based on the applicant’s debts and negotiate with creditors to reduce interest rates and monthly payments, waive late fees, shorten the repayment date, and stop debts. collection calls. Take Charge America then takes a small fee from the monthly payments.

Consumers are not required to agree to Take Charge America’s Debt Management Plan to receive the loan from MariSol Federal Credit Union.

FOLLOWING: When 401(k) loans make sense and don’t

Within a few days of submitting the Lend a Hand request, consumers should also hear from MariSol Federal Credit Union. The credit union may request more information to complete its review of the loan. Thereafter, he will inform the applicant if the loan has been approved.

If the loan is approved, the borrower must open an account with MariSol Federal Credit Union, start making payments on the new loan, and save a small amount of money each month.

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“Getting out of the vicious circle”

The Lend a Hand program aims to get participants out of the trap of an existing title loan, as well as help them avoid applying for one in the future, according to program advocates.

“Sometimes people think their only option is to go to Tio Rico or TitleMax,” Romano said. “Anytime we can help people see another way of doing something, that’s a good thing.”

When Hill recently faced another financial emergency, she didn’t go to a lender in title. Instead, she asked MariSol Federal Credit Union to help her out.

FOLLOWING: How to stay in control of your personal finances in a growing economy

Hill had given birth to a baby boy and had taken unpaid maternity leave.

She has continued to bank at the credit union since completing the Lend a Hand program. The credit union approved a loan at a lower rate than a title loan.

“MariSol is like family,” Hill said. If consumers are “looking for a place where they can save money and get out of the vicious cycle of title lending, I would recommend the program.”

How it works

If you have a car title loan, you may be eligible to pay it off by borrowing up to $4,000 at an annual interest rate of 15% from MariSol Federal Credit Union through the Lend a Hand program.

1. Upload an application and review the eligibility requirements at www.takechargeamerica.org/lendahand. Or download the app here in English or in Spanish.

2. Contact Take Charge America to schedule a free credit counseling session. A credit counselor will offer to help you budget and create an action plan to eliminate debt and save for the future.

  • By phone: 1-877-822-2410.
  • In person: 8 a.m. to 5 p.m. Monday through Friday at 20620 N. 19th Ave., Phoenix.

3. Submit your application and additional documentation to Take Charge America for review.

4. MariSol Federal Credit Union will review your application for loan eligibility.

  • If you are approved, the credit union will repay your title loan and work with you to set up monthly payments on the credit union loan. You will also be required to open a MariSol Federal Credit Union savings account with an initial deposit of $25 plus $10 per month to build up an emergency fund.

I have a problem? Azcentral can help you

Have you been scammed? Do you have a complaint against a business or government agency? The Arizona Republic/azcentral.com in partnership with Call For Action may investigate. We are #HeretoHelpAZ.

Complete this online formtext HereToHelpAZ to 51555 or call 602-444-2255 from 11 a.m. to 1 p.m. Tuesday through Friday to speak with a Call for Action volunteer.

Consumer journalist Rebekah L. Sanders investigates fraud and abuse issues involving corporations, healthcare facilities and government agencies. Contact her at [email protected]. Follow her on Twitter at @RebekahLSanders.

The Dangerous Truth About Bad Credit Auto Title Loans

If you have a free and clear car, but need cash fast, you might find yourself turning to a title loan. It could be the first step down a slippery slope – one you should avoid. Here we discuss how dangerous these loans are and why.

How Securities Lending Works

Auto title loans are a type of secured loan that uses the title of your vehicle as collateral. This means that if you fail to repay the loan as agreed, the lender has the right to repossess your car. These loans typically range between $100 and $1,000, and you must repay them either within 30 days in one installment or in installments, usually with renewals ranging from three to six months.

According to a 2016 Consumer Finance Protection Bureau study, one in five borrowers have their vehicle repossessed as a result of these loans. Also, more often than not, borrowers cannot afford to repay their loans in one installment, so they end up renewing their loan seven or more times in a row, leaving them trapped in a cycle of debt that can last. the longest. a year or more.

Predatory loans

Automotive title loans, as well as payday loans and pawnbrokers, are generally considered predatory types of lending. Due to the incredibly high interest rates that come with title loans – an average APR on an auto title loan is 300% – people often struggle to pay off their loan in full on time.

With a typical interest rate of 25% per month, a $1,000 loan costs you $1,250 to repay. When a consumer cannot meet this payment within 30 days, lenders usually allow you to “roll over” your loan. This is where people get trapped in the cycle of debt. If you pay $250 and renew your original loan amount, which added fees and interest, you still owe $1,250 or more in 30 days.

There are other factors that make these loans unsafe, such as add-ons, which can increase the cost. Add-ons like roadside assistance, credit report fees, and origination fees not only increase the cost of a title loan, but may be required instead of optional. Knowing this, if you absolutely must obtain a title loan, it is a very good idea to shop around before signing any documents.

Car title lenders are required by the Truth in Lending Act to give you the full loan terms in writing. You should also make sure you know your credit score and what’s on your credit reports, and have comprehensive auto insurance before you sign up for an auto title loan.

Before getting an auto title loan for bad credit…

You want to make sure that you consider all of your options before considering a title loan. Not only can your vehicle be repossessed, but there are also a number of other consequences.

For example, your car insurance company may decide to pay the lien holder directly if you are involved in an accident and your car is deemed a total loss. In some states, title lending companies are required to pay you the difference between the value of the vehicle and the loan balance. But, in other states, they are allowed to retain full payment from your insurance company.

Plus, since you’re giving your title as collateral, if anything happens to your car, like theft or a total, you won’t be able to be financed for a replacement until you pay off your title loan – especially if have you bad credit.

Before you sign on the dotted line for a high-interest car loan, consider these alternatives if you have bad credit:

  • Contact your creditors to tell them about your situation and see if they can work with you
  • Ask friends or family members for money to help you
  • Take out a small personal loan from a credit union or a bank
  • Learn about organizations that help with living expenses
  • Consider a cash advance on a credit card or ask your employer
  • Borrow from your 401(k) retirement account

As you can see, there are other options to consider. However, some of them also carry higher than average interest rates, such as credit card cash advances. Other options, such as borrowing from your retirement account or 401(k), should be done with extreme caution and consideration.

As we see

You should always be aware of all the options available to you if you need financial assistance. But, you also need to be careful because not all lender options are as good as they seem. Here has Auto Express Creditwe recommend that you always do your research before embarking on any type of auto loan, especially an auto title loan.

Car title loans trap low-income families in debt

In December 2014, Paul Gillespie’s wife died of a heart attack. He buried her on a Tuesday. On Saturday, tougher news came: Her landlord called and said she was selling the building, and he and his two teenage daughters had to find a new place to live.

Gillespie has moved. But the bad times follow one another: the following spring, he has a heart attack, forcing him to take time off from his work as a welder.

“I was short of money. I had just spent $10,000 on a funeral,” Gillespie said. He said he had bad credit and couldn’t get a traditional bank loan.

Then he remembered hearing advertisements for what are called car title loans. It’s a way for people who need a quick cash loan to use their vehicle as collateral. He showed up at one such lender in Danville, central Illinois, near his home.

Half an hour later, Gillespie said he walked through the door with $2,000. But after paying all the interest, Gillespie had shelled out more than $4,000 to pay off the loan.

“I was like, ‘Holy cow, I can’t believe I was so stupid,'” Gillespie said.

Gillespie was not stupid; he was desperate.

Car title lending has only been available in Illinois since 2009. There are 57 companies licensed to provide these loans, but many have multiple locations, resulting in thousands of locations spread across urban communities, suburban and rural.

Thousands of low-income families have increased their debt by taking out these high-interest loans, according to the nonprofit Heartland Alliance.

Here’s how it works: A car title loan doesn’t require the same type of scrutiny as a traditional loan. A borrower applies and hands over the car title if approved. Illinois has no regulations on how interest rates are determined. Each title company can decide what factors to consider when setting up the loan.

Anti-poverty advocates want state lawmakers to cap those interest rates, which they say in Illinois can be as high as 360%.

According to a Freedom of Information Act request filed by WBEZ, records show 64,000 car title loans in Illinois resulted in a repossession, loan write-off, or default in which at least one payment was missed. .

But here is a fuller picture of the impact of these loans.

According to the Illinois Department of Financial and Professional Regulation, the average length of a car title loan is 515 days. The average loan is $1,035 with fees of $2,758.

Always according to the state, as detailed in this report, the average income of borrowers is $26,219 per year. Last year, 68,537 title loans were made; the peak year was 2013 with 100,386. Since 2009, 751,558 loans have been taken out for a total amount of $778 million.

“It’s not just that you’re going to lose hundreds of thousands of dollars on these loans, which you will. But you also run the risk if you can’t afford the loan, you’ll lose your car,” said Jody Blaylock, financial policy analyst for Heartland Alliance.

The maximum loan amount that can be taken out at one time is $4,000. According to the Consumer Federation of America, Illinois is one of 16 states with triple-digit interest rates.

Attention to car title loans in Illinois is intensifying. As researchers and advocates watch the widening gap between rich and poor, they highlight the ways in which certain financial practices increase this gap. Places to cash checks, payday loans, court costs, and fines such as parking tickets can keep low-income people and people of color stuck in debt, making it harder to fight against poverty and the creation of wealth.

Several Illinois car title lobbyists declined to comment for this story, and none of the company’s offices returned calls or emails to WBEZ. But a few years ago, the head of the trade group representing car titles and payday loan companies testified before Congress. According to the group, this testimony is that these short-term loans help families in crisis when no one else will give them loans.

But Blaylock said a lower interest rate was crucial.

“Establishing a 36% interest rate cap is critical if we are going to create equity across the state and create opportunity for everyone,” she said.

Legislators introduced the Fair Lending Act in Springfield earlier this year, calling for a 36% cap. The bill did not have enough bipartisan support to get it out of committee.

Illinois State Rep. Christian Mitchell, a Democrat, said the goal now is to reintroduce the bill early next year and, in the meantime, garner support in the regions. of the state that are not traditionally Democratic, but where residents of Republican districts are also struggling. financially.

“There’s a lot of poverty down in the state and the further you go into the suburbs where there are definitely people affected by these loans,” he said.

Natalie Moore is the South Side reporter for WBEZ. Follow her on Twitter at @natalieymoore.

Could Car Title Loans Ruin Your Finances?

One in five people aged 45 to 64 with an income of less than $50,000 used a vehicle for a short-term loan. And about a third of people age 65 and older have received car title loans.

“The reason almost everyone gets these loans is normally to pay an immediate expense,” like a gas or electric bill or a credit card bill that’s due, Speer says.

But the average person who borrows $1,000 from a title lending company usually ends up paying back about $3,000 to $4,000, he says.

So while the car title loan might help pay the original bill, “now your condition is much worse,” Speer says. “Overall it’s going to end up being an even bigger crisis and your situation is going to be much worse.”

Repeat messages left with the American Association of Responsible Auto Lenders, an industry trade group, were not returned. However, Pat Crowley, spokesperson for the Ohio Consumer Lenders Association, which represents incumbent lenders in that state, says the loans are “very affordable” compared to alternatives. “We’re fully regulated. We’re very transparent about the fees we charge, and our fee structure is very clear,” Crowley says.

“We believe auto title loans are actually cheaper than other types of unsecured loans,” he says.

Here’s how car title loans work

When you get a title loan, it’s a short-term loan – usually just one month – that you secure with the title to your vehicle. Although the majority of title lenders require you to own your car, some do not. Either way, the lender puts a lien on your car. When you repay the loan, the lien is removed and you get your title back. Sounds pretty easy, right? Generally speaking, it is. Even retirees can get car title loans, as long as they have valid photo ID and proof of vehicle ownership. In many states there is not even a credit check.

The amount of the loan is based on the appraised value of the vehicle, and it is common for consumers to be able to borrow between 30 and 50% of the value of their car.

What are car title loans? – Chronicles of Times Square

Once you’ve decided to get a car title loan, it’s extremely important to know what you’re getting into, otherwise loan services can unduly benefit you. It’s an amazing opportunity to get some quick cash when you own a vehicle with a good free and clear title. However, you need to be sure that if something gets worse and you are unable to repay the loan, you will have to submit the car title to the money. In a nutshell, the car is used as collateral.

Many people find this method convenient. Getting a small loan with vehicle title can be very appropriate. When you are sure that you will be able to repay the amount borrowed and the interest amount, this may not be a problem. However, with some people it starts well but turns out to be a nightmare in the end. However, you can visit https://fasttitleloansnearme.com/car-title-loans to get a better idea.

The process

Taking a car title to a title loan service requires that there is absolutely no outstanding debt against anyone. Many companies may also require you to be fully insured. It is a positive sign. Even if the lending service holds the title to the car, you will be able to use the car. However, some title lending services may lend you money and just keep the car with them until the loan is paid off if the car is uninsured.

The amount of money a borrower will receive will depend on which securities lending service you use. Some might give you more money than another. Some have set amounts of money they lend while many vary in their lending ability depending on the client they meet. In the case of variable services, the amount of cash you receive may depend on the value of your car. This opens the door to opportunities to get the best deal in the market.

Many services have set a limit on the number of times you can get a loan from their platform in cases where you have not repaid their money. These loans are handled the same way as normal payday loans, but the thing you’re risking here is your car title.

In scenarios where you do not meet the terms of the loan agreement, the title loan service has the absolute right to repossess your vehicle. It is very important for you to be positive about the transaction.

A car title loan can be a good thing in an emergency. If you are struggling financially and own a car, then loaning your car can be a good idea to meet your financial requirements. There are a multitude of services that can help you acquire good car title loans, but trusting them all can be a mistake. Go for quality services with additional features and facilities that are ready to understand what your needs and demands are and are ready to serve you in the best possible way.

Lawmakers seek to end triple-digit interest on payday loans and car titles

By Charlene Crowell / NNPA Newswire

A group of Washington lawmakers are joining forces and influence to legislate a crackdown on predatory lending nationwide.

Seventeen U.S. House lawmakers and eight U.S. senators are backing companion bills that would cut the cost of payday loans and car titles from their typical 300% annual interest rate to no more than 36 % – the same rate protection that Congress first provided to military families in 2006.

Today, 90 million Americans living in 15 states and DC enjoy rate caps of 36% or less.

But in the other 35 states, residents remain vulnerable to triple-digit interest rates that average 400% nationwide on an average loan of just $350.

When consumers use their car titles as collateral for a larger and equally expensive loan, personal transportation loss occurs when borrowers can no longer afford the skyrocketing costs.

If enacted, the legislation is expected to have an immediate impact on payday and car title loans, but would ensure that all consumer financial services would end cycles of debt that trick and trap unsuspecting consumers into debt. long-term.

The bicameral effort is led in the US Senate by Senators Dick Durbin of Illinois and Jeff Merkley of Oregon.

Their leading counterparts in the House of Representatives are Matt Cartwright of Scranton, Pennsylvania and Steve Cohen of Memphis, Tennessee.

“Predatory lending disproportionately hurts people who are already in financial difficulty,” Rep. Cartwright noted, where in Pennsylvania these kinds of predatory, high-cost lending are already prohibited by state law. “This consumer-friendly legislation would relieve the exorbitant costs for many low-income consumers across the country.

Cartwright’s House colleague Rep. Cohen felt the same way. “Throughout my career, I have always worked to protect people from those who would take advantage of them through predatory lending practices that can wreak havoc in people’s lives and perpetuate a cycle of debt,” he said. -he declares. “Justice and morality dictate that reasonable caps on interest be adopted to protect borrowers from sneaky lenders.”

From the Deep South to the Pacific Rim, and west to the mid-Atlantic and Midwestern states, state payday interest rates range from 662% in Texas to 460% in California and 601 % in Virginia.

Similarly, in the Midwest, the states of Illinois, Missouri, Ohio, and Wisconsin have comparable high interest rates that all exceed 400%.

In Alabama and Mississippi, two of the poorest states in the nation by per capita income, payday interest rates are 521% and 456%, respectively.

“What we’ve seen across the country is that when voters are given the option to support a rate cap, large majorities consistently say ‘No’ to debt-trap loans,” said Yana Miles, Senior Legislative Advisor at the Center for Responsible Lending. “When it comes to state legislatures, reform efforts are often thwarted by industry.”

Already more than 40 national, state and local organizations have jointly written to their members of Congress in support of the legislation.

Signatories to the correspondence include civil rights organizations, trade unions, consumer rights advocates and research institutes.

Posters advertising short-term loans hang outside stores in Birmingham, Alabama, U.S., Tuesday, Feb. 10, 2015. In Alabama, the sixth-poorest state with one of the highest concentrations of lenders, advocates are trying to curb payday loans and land titles, a confrontation that clergy have presented as God versus greed. They’ve been blocked by an industry that’s morphing to evade regulation, flooding lawmakers with donations, holding hearings with lobbyists and even fighting a joint database meant to enforce a $500 limit on loans. Photographer: Gary Tramontina/Bloomberg

Why automatic title loans are a bad idea

If you’re strapped for cash and own your car freely, an auto title loan might seem like a great way to get some quick cash when you need it. But auto title loans are among the most expensive types of credit you can get, along with payday loans and pawnbrokers. All of these loans fall into the category of predatory lending: they target consumers who desperately need money and are therefore willing to pay ridiculously high prices for it.

How title loans work

Auto title loans use your car as collateral. Collateral is property that is used to secure a loan – in other words, it insures the lender against default. If the borrower fails to repay the loan on time, the lender has the right to take any property listed as security for the loan. It’s true: if you don’t pay off your car loan, the lender can take your car. Some auto title lenders will even ask you to install a GPS device in your car so that if they decide to repossess the vehicle, they can find you wherever you go.

Image source: Getty Images.

The cost of auto title loans

Auto loan lenders charge an average of 25% per month interest on the loan. That’s an annual percentage rate (APR) of 300%! Even credit cards only charge an average APR of 15.59%, and these are the most expensive traditional credit options. And you can expect an auto title loan to include a variety of fees in addition to exorbitant interest. In other words, if you were to take out a $1,000 auto title loan and pay it off 30 days later, you would owe the lender $1,250, plus who knows how much in fees.

Alternatives to title loans

Most consumers have much better options than an auto title loan, even if their credit score is poor. If you need money because you’re behind on paying your bills, contact your creditors and see if you can negotiate a debt reduction or at least a longer repayment period. If you’re really in over your head, a credit counseling service can help you put a debt repayment plan in place. Other options for getting some quick cash include a credit card cash advance (probably very expensive, but not as bad as a car title loan), a loan from a friend or family member, or a small loan or line of credit from your local bank. Even borrowing money from your 401(k) might be better than taking out an auto title loan.

Once you’ve gotten out of your current financial crisis, make it a priority to set up a emergency savings fund to protect you from similar situations in the future.

Get a title loan

If you decide you really have no choice but to get an auto title loan, shop around with different title lenders to get the best deal possible. Carefully review the terms of the loan and opt out of any “extra” features such as roadside assistance. If the lender insists you take such add-ons, find another lender. Find out about all the different fees listed on the loan documentation (there will likely be several) and try to negotiate to have these fees waived or at least reduced. If you push the lender hard enough, they may be willing to bend these costs a bit. Finally, avoid “rollover” offers. Title lenders will often allow you to pay only the interest on your loan and defer the principal to a new loan, but this will lock you into a never-ending cycle of escalating fees and interest.

Lend a Hand program helps Arizonans repay car title loans

Four community-focused organizations are launching a program to rescue Maricopa County residents struggling to pay off high-cost title loans and help put them on the path to healthy credit and financial success.

The program is called “Lend a Hand” and is offered through a partnership between the Arizona Community Foundation, MariSol Federal Credit Union, Phoenix IDA and Take Charge America.

According to the Consumer Federation of America, Arizona is the seventh most concentrated title lending market in the nation. In its report, “Wrong Way: Wrecked by Debt,” the Federation also states that one in six borrowers in Arizona had to repossess their car and associated fees, which averaged half of the company‘s outstanding debt. ‘borrower.

“Individuals in our community face what is called a debt trap. They are caught in a vicious circle of exorbitant interest rates, excessive fees and unrealistic loan terms,” said Juan Salgado, executive director of Phoenix IDA. “The Lend a Hand loan program is an alternative for those who need help paying off their loan to avoid losing their car, ruining their credit or worse,” Salgado continued.

Here’s how the Lend a Hand program works:

  • Interested borrowers can download an application and view eligibility requirements at http://www.takechargeamerica.org/lendahand/.
  • Once the application is submitted, the borrower can schedule a free, confidential credit counseling session with Take Charge America to develop a budget and create an action plan to eliminate debt and save for the future.
  • MariSol Federal Credit Union will review the application for eligibility and reimburse up to $2,000 of the outstanding title loan for qualified applicants. MariSol will then convert the repaid amount into a new low-interest loan with better repayment terms for borrowers. MariSol will also help borrowers establish a savings account to fund future emergencies, requiring an initial savings deposit of $25 plus additional savings deposits of $10 for each month of the loan.

“The Lend a Hand loan program offers applicants favorable loan terms at no cost that will make sense for their budget,” explained Robin Romano, general manager of MariSol Federal Credit Union. “Approved borrowers will also become members of our credit union and enjoy the benefits and stability it offers,” Romano said.

According to a 2015 study by Pew Charitable Trusts, more than 2 million people, or about 1% of American adults each year, use high-interest auto loans and borrow against their cars.

“Studies prove what we already see when we drive down certain streets in Phoenix. Car title lending companies are concentrated in financially vulnerable communities,” said Elisa de la Vara, community manager at the Arizona Community Foundation. “Until Arizona policymakers act to further limit this industry, as they have done with payday lenders, this program provides a better option for residents who are struggling to pay their loans on car title,” de la Vara explained.

Take Charge America, a national nonprofit credit counseling agency headquartered in Phoenix, helps with the financial education component. “Our role is to focus on the long-term financial health of each candidate. As soon as you contact us, we’ll offer you a free credit counseling session, a thorough review of your credit report, and help you budget,” said David Richardson, CEO of Take Charge America. “Our goal is to provide the financial knowledge and resources needed to help borrowers avoid costly loan traps in the future,” Richardson added.

If you’re having trouble repaying a car title loan and you live in Maricopa County, call 1-877-822-2410 or visit http://www.takechargeamerica.org/lendahand/. The Lend a Hand loan program will be offered for a limited time while funding is available.

8 cheaper ways to raise cash than car title loans

Some people in need of emergency cash may rush to the nearest car title lender for a quick loan, but that’s far from the best option. A car title loan, also known as a “pink slip loan,” is a short-term loan that requires borrowers to offer their vehicle as collateral for outstanding debt.

Interest rates on car title loans are notoriously high, among other drawbacks, so before you sign up, read and study these eight alternative fundraising strategies first.

Key points to remember

  • Car title loans are short-term, require borrowers to provide their vehicles as collateral, and charge significantly higher interest rates than traditional bank loans.
  • There are many different lending alternatives, including peer-to-peer loans, short-term bank loans, credit card cash advances, and even charitable donations.
  • Borrowers struggling with debt should consider talking to their lenders about lowering interest rates or creating more realistic repayment schedules.

How do car title loans work?

To qualify for a car title loan, a borrower must own their vehicle free and clear and present an unliend title to the lender. A valid ID, current vehicle registration, and proof of insurance, residency, and income are also required. Some lenders also require vehicle keys or insist on installing GPS tracking devices.

Although the amount of a car title loan depends on the value of the vehicle, it is generally capped at half the current value of the car. These loans are short-term – usually 15 or 30 days – and have a three-digit annual percentage rate (APR), which is a much higher interest rate than those associated with traditional bank loans.

Typically purchased by those with limited financing alternatives, car title loans are notoriously expensive. A $1,000 title loan with 25% monthly interest will cost the borrower $1,250 in 30 days, plus lender fees. Failure to repay the loan may result in the loss of the guaranteed vehicle.

Fortunately, there is no shortage of beneficial alternatives to car title loans. The following financing sources and debt reduction methods can help those who need money fast.

Car title loans are generally considered predatory loans.

1. Short-term bank loans

Before committing to car title loans with triple-digit interest rates, borrowers should first attempt to obtain a traditional loan from a local bank or credit union. Even the most expensive bank loans are cheaper than title loans. Additionally, some banks will provide secured loans to borrowers with less than stellar credit. As such, employed people who own cars can pledge their vehicles for bank-level interest rate loans.

If you have credit issues, finding the right loan can be especially stressful during a financial emergency when you need to borrow money quickly. Fortunately, you can still access a variety of emergency loan options even when your credit isn’t great.

2. Credit card cash advances

Although cash advances are notoriously expensive, they still carry interest rates well below triple digits. A borrower with a credit card, a line of credit (LOC) and the ability to repay the loan in several weeks will likely have access to these funds, at a much lower cost.

On the other hand, if the balance is not repaid in a timely manner, interest charges can quickly accumulate.

3. Peer-to-peer lending

Since peer-to-peer (P2P) loans are funded by investors rather than banks, approval rates in these situations are significantly higher than bank loan applications. During this time, interest rates are generally much lower.

Interestingly, the minimum loan amount can be higher than the minimum car title loan amount, so there is a risk of borrowing more than necessary. But prepayment is allowed without penalty.

4. Help from family or friends

Friends and family might be willing to offer or donate the money needed. In loan situations, the parties involved must cement agreed interest rates and repayment plans in written contracts. Although interest rates are expected to be significantly lower than traditional bank loans, a borrower can still offer their vehicle as collateral as a sign of goodwill to lenders.

5. Additional part-time work

If possible, borrowers can supplement their income with temporary employment. Many employers hire people on a case-by-case basis. For those who take the initiative to look, the jobs are there.

6. Social services or charities

State welfare offices, also known as general relief offices, provide emergency cash assistance to eligible individuals. Help may also be available in the form of food stamps, free or discounted child care, and internet services.

Churches and other religious institutions often provide people in need with food, shelter, and educational and career guidance. Individuals on parole or probation should contact their supervisory officers for a list of resources.

7. Negotiate with your creditors

Borrowers who are having difficulty repaying their loans should contact their creditors to discuss the possibility of creating alternative payment terms, lowering interest rates, negotiating discounts, waiving late fees and other concessions.

8. Credit and Debt Counseling

This is an option for people who are chronically short of money or who ritually pay high prices for quick cash relief. They should seek advice from a Certified Consumer Debt Specialist (CCDS). These practitioners can help design a strategy to cut costs, reduce debt, and save for bad weather. Counselors can help borrowers understand the true cost of short-term loans while directing them to better options.

The essential

Car title loans are often considered predatory because they are extremely expensive and target low-income demographics. After all, those with the most limited financial resources are the least equipped to pay the high costs.

Title loans quickly trap borrowers in endless cycles of debt that frequently result in the loss of their vehicles. If you need emergency cash and find yourself short on cash, consider the alternatives instead. There is no one-size-fits-all solution when it comes to securing needed cash.

Payday loans and auto title loans face tough new crackdown

Payday loans will be severely restricted under new rules proposed today by federal regulators.

Primarily, the rules will require lenders to ensure consumers can afford to repay loans and will require lenders to report loans to a credit bureau-like entity to track the number of outstanding loans and the amount owed. .

The rules proposed by the Consumer Financial Protection Bureau will not ban all payday loans, auto title loans or other high-cost loans. But they serve as the federal government’s first big shot at lenders who sometimes charge consumers nearly 400% interest and bury them in a bottomless pit of debt.

“The Office of Consumer Affairs offers strong protections aimed at ending payday debt traps,” CFPB Director Richard Cordray said in a written statement. “Too many borrowers looking for a short-term cash-flow solution are saddled with loans they can’t afford and go into long-term debt. It’s a bit like getting into a taxi just to cross town and get stuck on an extremely expensive cross-country trip..

“By putting in place common sense, common-sense lending standards, our proposal would prevent lenders from succeeding by making borrowers fail,” he said.

With payday loans, consumers can take out small, short-term loans (often 14 days) in exchange for high fees and interest rates. A loan could be $500. Then it is reimbursed with the person’s next paycheck. If the consumer cannot afford to pay it back because that paycheck is already incurred for other living expenses, the loan can be rolled over, with more fees and interest.

Payday loan industry supporters are expected to push back with strong commentary when details of the new rules become known later today. The Community Financial Services Association of America, which represents non-bank lenders, says “payday loans are an important source of credit for millions of Americans who live paycheck to paycheck.”

The industry association notes that traditional banks do not adequately serve 24 million American households that do not fit into the traditional, regulated banking system. More than 16 million households take out at least one personal loan each year. The CFSA also noted that a recent Federal Reserve report indicates that 47% of Americans cannot afford an unexpected $400 expense without selling something.

“The CFPB’s proposed rule is a terrible blow to consumers because it will cut off access to credit for millions of Americans who are using small loans to manage a budget shortfall or unexpected expense,” said Dennis Shaul, CEO of CFSA, in a writing. declaration. “It also sets a dangerous precedent for federal agencies developing regulations that impact consumers.”

The CFPB has developed many regulations that affect consumers. If so, he’s asking interested parties and the general public to submit written comments on the proposed rule by September 14. The final rules will be published at some point thereafter.

Federal restrictions on payday loans took more than four years to develop. “From the beginning, payday loans have been a significant priority for the Office of Consumer Affairs,” said Cordray, who was appointed to his position in early 2012.

CFPB research shows that more than four out of five payday loans are reborrowed within a month. One in five payday loans end up in default, and one in five one-time payment auto title loan borrowers end up having their car or truck seized by the lender for non-repayment.

In 2008, Ohioans thought they had won the consumer victory, and undoubtedly those voters spoke loud and clear. But data from the Center for Responsible Lending also speaks loud and clear — of the subversion of the statewide consensus that Ohioans reached in 2008, subversion unchecked by the legislature.

This will be Ohio’s second go-around with payday loan restrictions. Payday loans were legalized in Ohio in 1995, but complaints about fees, deceptive tactics, and interest rates as high as 391% led to a crusade against them. In 2008, about 64% of Ohio voters approved keeping a payday loan reform law that capped interest rates at 28%. But payday lenders have found loopholes so they can continue to charge triple-digit interest rates, not just 28%.

US Senator Sherrod Brown, D-Ohio, said in an interview that he was “confident” this reform will work where the last one failed. These rules will eliminate loopholes and fix two big problems: first, making sure payday loans are tracked in a database so consumers can’t have multiple payday loans at the same time. Second, prevent loans from being rolled over again and again. Consumers get in trouble, Brown said, when they take out loans they can’t repay in the short term and “the hole is too big to get out of.”

“My mission is not to put them (payday lenders) out of business,” Brown said. “My goal is for them to play by the rules.” He added that payday loans “fill a need” for some consumers.

Brown, the senior member of the U.S. Senate Banking, Housing, and Urban Affairs Committee, has called predatory payday lending and car title lending an “epidemic” that’s costing Ohios more than $500 million in fees every year. Last year, Brown led a Senate effort calling on the CFPB to pass tough rules. “I will fight attempts to weaken these sensible rules and ensure that there are no loopholes that allow lenders to continue to exploit struggling Ohios,” he said.

The CFPB will announce details of its proposed new rules later today. Here are some of the expected provisions:

  • Lenders will be required to determine whether the consumer can pay each payment when due while still being able to pay other financial commitments and basic living expenses. The test requires paying off everything owed, including fees, without borrowing more within the next 30 days.
  • The number of short-term loans that can be issued in quick succession would be capped.
  • Lenders would be prohibited from offering certain short-term loans to people who have short-term loans outstanding or who have been indebted on short-term loans for more than 90 days in the last 12 months.
  • Lenders could offer less restrictive loans if interest rates are capped at 28% and application fees do not exceed $20.
  • Lenders should notify consumers in writing before debiting a payment from their bank account. And if two payments fail, the lender can no longer debit the account without specific written authorization.

Are auto title loans predatory? A federal study raises concerns.

A report released Wednesday by the federal Consumer Financial Protection Bureau found high rates of vehicle repossession and long-lasting debt within the auto title lending industry.

Auto title loans are meant to provide borrowers with short-term access to cash when they need it most. But the CFPB found that for many consumers, loans quickly snowball into long-term debt. The report raises questions about the state of current lending practices and could spur additional federal regulation.

Title loans allow borrowers to use their vehicles as collateral to borrow what are usually small amounts of money – an average of $700. Lenders hold title to the borrower’s vehicle until the loan is paid off and charge a annual percentage rate of approximately 300 percent, according to the report. If a loan cannot be repaid in full, borrowers are forced to renew the loan and often pay associated fees.

Only 20 US states currently require auto title loans to be paid in full at the end of the initial term, while five others allow structured payment plans.

The bureau’s study of 3.5 million loans from 2010 to 2013 showed that one in five borrowers with a one-time payment car title loan ends up having their vehicle owned by lenders, and about half of these loans end up becoming long-term debt obligations with borrowers frequently. take out four or more loans to repay their original loans. Eighty percent of auto title loans are not repaid in full in one payment.

The CFPB also found that about two-thirds of the securities lending industry is backed by borrowers stuck in a debt cycle for seven months or more.

“Our study gives clear evidence of the dangers auto title lending poses to consumers,” CFPB Director Richard Cordray said in a statement. “Instead of repaying their loan in one installment when due, most borrowers find themselves in debt for most of the year.”

Mr Cordray added that borrowers may be more affected by repossession as it can block their access to work or other services.

Automatic title loans work the same way as short-term payday loans, which have also proven be problematic for borrowers; According to The Pew Charitable Trusts, online payday loans averaged an APR of 650% and led nine out of 10 borrowers to file complaints with the Better Business Bureau about their lenders. Last week, Google announced it would ban ads on its services for such loans.

The auto title lending industry rose to prominence after states began capping payday loan interest rate levels over the past decade. Lenders have continued this practice by moving their collateral from the money to the vehicles, and auto title lending currently attracts 2 million Americans in need of short-term loans each year. Pew also found that about 5 million Americans take out payday loans each year.

Associated Press material was used in this report.

One-time payment car title loans can cause long-term debt

Most borrowers who take out a one-time payment car title loan end up borrowing again because they can’t afford to make the payment when due, according to a new federal study.

That’s why a lot of auto title business comes from borrowers who end up taking out multiple loans in a row and staying in debt for months, according to the Consumer Financial Protection Bureau. found in a study released on Wednesday.

Car title loans are a type of short-term, high-interest loan used by consumers who lack money to pay bills or meet unexpected expenses. The title serves as collateral.

But what may be considered a short-term loan often turns into long-term debt as additional fees and interest are added to the original amount owed, according to the report. Most car title loans are due in 30 days, but in some states they can be due in as little as two weeks.

About one in five auto title borrowers have a car seized for non-payment from a lender, according to the report.

“Collateral damage can be especially severe for borrowers whose car or truck is seized, costing them easy access to their job or doctor’s office,” office manager Richard Cordray said during a briefing. call with reporters.

For its report, the bureau looked at about 3.5 million one-time payment loans issued by non-bank lenders from 2010 to 2013.

One-time payment car title loans, which are repaid with a lump sum payment, are available in 20 states; five other states only allow auto title loans that are repaid in installments, according to the report.

Car title loans are usually based on a percentage of the car’s value, as determined by the lender. The lender holds title to the borrower’s car, truck or motorcycle and returns it when the loan is repaid. The borrower retains use of the vehicle as long as the loan is outstanding, but the lender can repossess it if the borrower does not repay.

The typical car title loan is $700 and the effective annual rate is around 300%, according to the report.

The report found that only 12% of borrowers managed to be “one and done”, meaning they repaid their loans with fees and interest in one payment within 30 days.

Car title loans are similar to payday loans, although they are often for larger sums. They will likely be covered by new payday loan regulations the bureau is expected to come up with in the coming weeks.

A last year’s report from the Pew Charitable Trusts urged policymakers to enact reforms to make auto title loans less risky, such as adding a requirement that lenders assess a borrower’s ability to repay the loan, based on income and expenses .

The Pew Report found that more than two million people, or about 1% of American adults, use high-interest auto title loans each year.

Borrowers spend about $3 billion a year, or $1,200 each, in fees for loans that average $1,000, Pew found.

Here are some questions and answers about car title loans:

Are car title loans used primarily for emergencies?

According to Pew research, only a quarter of borrowers use title loans for unexpected expenses, while half say they use them to pay regular bills.

What alternatives are available to borrowers?

Delvin Davis, senior research analyst at the Center for Responsible Lending, said even a high-interest credit card might be a better option than a car title loan. “I would avoid them at all costs,” he said. “Once you’re in, it’s hard to get out.”

the The Federal Trade Commission urges consumers to consider tapping into any savings accounts they might have, or even borrowing from family or friends.

Some credit unions offer “borrow and save” programs, which allow borrowers to take out small loans if they agree to set aside some money in a savings account, to help provide liquidity for future needs.

Where can I complain about a car title lender?

If you have a complaint, you can contact your state attorney general’s office. You can also file a complaint with the Consumer Financial Protection Bureau.

Auto title loans offer quick cash for holidays, but critics warn of rising debt – Reuters

Scott Sweetalla, an auto loan customer, had his car repossessed by a lender due to high interest rates. “The money you would get from these people is not worth what happens later,” he said. (Photo by Erica Lang/Cronkite News)

Advertisements and online listings for auto title loans make them especially attractive during the holiday season when many families need extra money.

“I didn’t have a lot of money then, I wanted to buy Christmas presents, pay bills for my family,” said father-of-two Scott Sweetalla.

The Air Force veteran shopped around and thought he had a deal when he called Maximum Title Loans.

“And the gentleman who answered the phone asked me a few questions about my vehicle and then said ‘I can get you $2,000 for $150 a month’ and I thought, wow, that was awesome .”

But he also had to pay an extra $300 a month in interest. When Sweetalla fell behind, Maximum Title Loans called her referrals.

“In my case, they called them over and over and over again,” he said. “My sister doesn’t even want to talk to me anymore because of this.”

Maximum Title declined an interview request and would not comment on the terms of this or any other loan.

Seven months later, when Sweetalla could no longer make the payments, Maximum Title sent someone home.

“I woke up the next morning to go to work and my car was gone. My heart sank a little. I kind of imagined what it could have been,” he said.

As the number of auto title lending companies grows, so do the customers who don’t understand the risks.

“They keep going into debt because they believe it’s the only option they have,” said state Rep. Debbie McCune Davis, D-Phoenix. “I think we’re pushing these families into more debt and away from opportunities for themselves and their children.”

After the law allowing payday lenders to operate in Arizona expired in 2010, auto title loans filled a similar role.

“If you drive through certain neighborhoods, we know it’s like an economic red line. We know they’re looking for families with an annual income of $40,000 or less,” McCune said.

McCune said she was working with consumer groups to ask the legislature for tougher regulations to “tighten up some of this.”

“Anything that limits that availability will just force consumers to go to offshore lenders, tribal lenders, unlicensed lenders, maybe someone down an alley,” said Scott Allen, president of the Arizona Title Loan Association. “That is to say, it’s definitely not a benefit to consumers in any state, especially Arizona.”

Allen describes auto title loans as “fast, efficient and convenient.”

He said reviewers should talk to consumers who have had a successful experience with a lender and appreciate the service they provide. He made Michael Donahoe, a title loan client, available to talk about his loans.

“It’s always worked, I haven’t had any complaints about the fees,” Donahoe said.

Donahoe said he worked as a lawyer for 40 years, practicing administrative law for airlines and business aviation. Now retired, he says he does legal advice.

He said he had taken out eight title loans in the past 12 years and usually paid off the loans in 90 to 120 days.

“The best thing about Cash Time is that they’re really fast,” he said. “They make good profits on me. So we both win,” Donahoe said.

Federal regulators are working to make sure consumers understand the terms of their loans.

The Consumer Financial Protection Bureau, a federal agency created in 2010 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, is considering a proposal to end “debt traps.” which would include advice to lenders on assessing whether or not a consumer has the ability to repay the loan.

“There are currently no federal rules that require lenders to determine whether or not the consumer has the ability to pay small loans like payday loans or car title loans.” said Christopher Peterson, special adviser to the director of the consumer office.

“We are very concerned about practices in the marketplace that appear to trap consumers in debt,” Peterson said.

The bureau plans to announce a notice of proposed rulemaking as early as 2016, followed by a 90-day public comment period. But there is no timetable for when or if a new regulation will come into effect.

In the meantime, the industry continues to grow. But it’s hard to know exactly how many auto title loan companies have replaced payday lenders in Arizona.

“Since the Sunset became active in July 2010, we’ve had an increase in sales financing licenses,” said Lauren Kingry, Superintendent of the Arizona Department of Financial Institutions. “However, it is difficult for us to determine if these are payday lenders or if these are companies interested in a simple sales financing license.

The department also receives consumer complaints.

“Many complaints are resolved by simply discussing what was signed and discussing the details of the transaction without further action being taken by the consumer,” Kingry said.

Sweetalla is still looking for her car.

“I see a similar vehicle every now and then on the street and I’m like no. This is not mine.”

He won’t be looking for another auto title loan.

“The money you would get from these people is not worth what happens later.”

A New Way to Tackle the Poor: Car Title Loans

The rusty 1994 Oldsmobile that sat in an alley just outside of St. Louis was an unlikely ATM. That was until the owner of the car, a 30-year-old hospital lab technician, saw a TV commercial describing how to get money from such a car, in the form of a short-term loan.

Lab technician Caroline O’Connor, who needed about $1,000 to cover her rent and electricity bills, believed she had found a financial lifeline. “It was a relief,” she said. “I didn’t have to beg everyone for the money.”

His loan carried an annual interest rate of 171%. More than two years and $992.78 in debt later, his car has been repossessed.

“These companies put people in a hole they can’t get out of,” O’Connor said.

Autos are at the center of the biggest subprime lending boom since the mortgage crisis. The market for loans to buy used cars is growing rapidly. And in the same way that a booming mortgage market once prompted millions of borrowers to recklessly exploit their home equity, the new boom is also prompting people to take out risky lines of credit called title loans.

In these loans, which can last up to two years or as little as a month, borrowers surrender title to their cars in exchange for cash – usually a percentage of the cars’ estimated resale value.

“Turn your car title into holiday money,” TitleMax, a major title lender, said in a recent TV commercial, showing a Christmas stocking brimming with cash.

According to a survey by the Federal Deposit Insurance Corporation, more than 1.1 million households in the United States used auto title loans in 2013.

For many borrowers, title loans have dire financial consequences, causing owners to lose their vehicles and put them further in debt. A review by the New York Times over three dozen loan agreements revealed that after factoring in various fees, effective interest rates ranged from nearly 80% to over 500%. While some loans come with 30-day terms, many borrowers, unable to pay the full loan and interest, say they are forced to renew loans at the end of each month, incurring a new set of charges.

Many people find that they find it hard to follow almost as soon as they walk away with the money. As a result, about one in six title loan borrowers will have their car repossessed, according to an analysis of title loans by the Center for Responsible Lending, a nonprofit organization in Durham, North Carolina.

“It’s nothing but government-sanctioned loan sharking,” said Scott A. Surovell, a Virginia lawmaker who has proposed bills that would further restrict incumbent lenders.

The lenders say they provide a source of credit for people who cannot get cheaper loans from banks. High interest rates, say lenders, are necessary to offset the risk that borrowers will stop paying their bills.

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The title lending industry thrives because of the importance of the car.

While people seeking title loans are often the most desperate — facing job loss, divorce, or family illness — lenders are willing to give them loans because they know most borrowers will pay their bill to keep their car. Some lenders don’t even bother to assess a borrower’s credit history.

“The threat of repossession turns the borrower into an annuity for lenders,” said Diane Standaert, director of state policy at the Center for Responsible Lending.

Unable to raise the thousands of dollars he needed to repair his car, Ken Chicosky, a 39-year-old army veteran, felt hopeless. He received a $4,000 loan from Cash America, a lender with a storefront in his Austin, Texas neighborhood.

The loan, which carries an annual interest rate of 98%, helped him fix the 2008 Audi he was relying on for work, but it caused his credit rating to drop. Chicosky, who is also attending college, uses some of her financial aid to pay her title loan bill.

Chicosky said he knew the loan was a bad decision when he got the first bill. It detailed how he would have to pay a total of $9,346 – a sum made up of principal, interest and other fees. “When you’re in a situation like that, you don’t ask a lot of questions,” he said.

Title lenders benefit as state authorities restrict payday lending, effectively kicking payday lenders out of many states. Although title loans share many of the same characteristics — in some cases, they carry rates that dwarf those of payday loans — they have so far escaped a similar crackdown.

In 21 states, car title lending is expressly permitted, with title lenders charging interest of up to 300% per year. In most other states, lenders can provide loans with cars as collateral, but at lower interest rates.

Johanna Pimentel said she and her two brothers have taken out several title loans.

“They’re everywhere, like liquor stores,” she said.

Pimentel, 32, had moved his family from Ferguson, Missouri, to a more expensive suburb of St. Louis that promised better schools. But after a divorce, she struggled to pay her rent.

Pimentel took out a title loan of $3,461 using his 2002 Suburban as collateral. After running late, she woke up one morning last March to find the car had been repossessed. Without it, she would not be able to continue running her daycare business.