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!

Pritzker signs law to cap high interest payday loans and securities lending | Chicago News

Governor JB Pritzker signed the Illinois Predatory Lending Prevention Act late last month, which caps annual interest rates on short-term loans at 36%.

The law, which took effect immediately, has an impact on payday loans – typically a two-week loan in which the money is taken from the borrower’s next paycheck. It also has an impact on auto title lending and other short-term loan products.

“Anything over 36% is predatory and wear and tear,” said State Senator Jacqueline Collins, who co-sponsored the measure. “So we know that high cost payday loans and auto loans have robbed communities of billions and billions of dollars, primarily black and brown communities in the state of Illinois.”

Kesha Warren knows the high cost firsthand. When she needed a short-term cash injection of $ 1,250 to cover the wage costs of her small janitorial services business in 2019, she took out an auto title loan, a short-term loan that uses the borrower’s vehicle as collateral.

She says she has been left out of more traditional bank loans.

“No one wants to lend to someone who has $ 100,000 in student loans, so it was very difficult for me to get a traditional loan,” Warren said.

The loan carried an annual interest rate of 197%. This inflated her original loan by $ 1,250 into a total payment of $ 3,400 which she repaid earlier this year. If she hadn’t, it could have cost her an additional $ 2,000.

But Steve Brubaker, who is lobbying the state government on behalf of the Illinois Small Loans Association, says the statutory 36% rate cap will effectively put most payday and auto title stores out of business, while cutting a lifeline for borrowers with poor credit.

“We are closing these stores, we are laying people off, we are not giving customers any options and we are taking a billion dollars out of the market that was used to fix your car, buy a new refrigerator, spend on children’s clothes for. school, ”Brubaker said.

The average APR for an auto title loan in Illinois is 197%, according to statistics from the Illinois Department of Financial and Professional Regulation. The average rate for payday loans is 297%.

But Brubaker says the numbers are misleading. When you measure the typical two-week loan term, it comes down to about $ 15 per cent.

“When they see this giant figure, they misunderstand what the customer has to pay back,” Brubaker said. “The average payday loan amount in 2019 was $ 340. And the average fee amount was $ 52.

Brent Adams is Vice President of the Woodstock Institute, a non-profit organization that advocates on behalf of low-income communities and communities of color. He says the payday loan industry relies on inserting borrowers into a never-ending cycle of debt with hidden running costs.

“The business model is to keep the consumer on the loan, so when the bill comes due, the lender will offer an option to roll over the loan, refinance it, take out a different loan, a number of options,” Adams said. . .

“It is seen as an opportunity to be able to meet needs, but in reality it is (to enter) a cycle of debt,” said Lizette Carretero, head of financial well-being. the resurrection project. “We see it mostly in communities of color, we see it in households earning less than $ 25,000 a year.”

Even if Pritzker signed the legislation, the problem might not end there.

Opponents of the payday loan industry say they are concerned about a series of bills currently circulating in the General Assembly. They say these bills would take away some of the protections in the new law.

State Senator Sue Rezin is a sponsor of one of these bills in the Senate, SB2306, which she said would protect consumers while giving them access to lending options.

Senate Bill 2306 proposes a straightforward amendment to the Predatory Loan Prevention Act that would continue to allow traditional financial institutions to offer convenient and well-regulated auto loans to consumers in Illinois through Illinois auto dealers, ”Rezin said in an emailed statement to WTTW News. .

“Protecting Illinois consumers is essential, which is why my bill strikes a balance between protecting Illinois consumers and ensuring secure access to auto credit. Under this legislation, interest rate caps are still in place to protect consumers from predatory lenders. I look forward to working with all parties to address their specific concerns as we move forward with this bill. “

State Representative John Carroll, who sponsored a similar bill in the House of Representatives, declined to be interviewed.

Brubaker says he believes the 36% rate cap will unintentionally push borrowers into even more dangerous and unregulated online lending products.

But Collins says credit unions and community banks can pick up the slack, and ending predatory lending helps eliminate systemic racism.

“Unless we really face these policies and institutional barriers, we will always face policies that preserve inequalities,” Collins said.

The Resurrection Project Carretero agrees. “We understand that people (enter) these programs because of credit issues. We strive to work with credit unions, community banks, second chance products from real institutions that allow you to get back into the financial sector and seek opportunities to create a better financial journey, ”he said. she declared.


How to find the best title loans online

Sometimes life circumstances force you to assess your financial situation and you may decide to take out a title loan to cover an unexpected expense. Although this type of loan comes with high interest rates and often requires you to comply in the short term, some people choose them because they do not take into account the credit score of the applicant and generally they can be approved very quickly. By looking for the best title loans online, aim for anti-scam or financial review sites to see if people have made complaints about their services. In these reviews, you will also get a better insight into the title deed lender’s application process. If you are considering a title loan to help pay for an unexpected expense, the collateral asset most often requested by lenders is a vehicle. If you are considering going for a title loan in the near future, we are sharing some information on how to find the best title loans online.

Check licenses

One of the first steps to take once you find a company that offers these types of services is to make sure they are legally licensed to operate in your area. Usually, you can check online directories dedicated to the list of licensed title lending companies, or the company’s website should display and use this information. If you visit their offices in person, they must display the business license in a public area.

You need to do some research beforehand and ask for more options by consulting your friends and family or going online. Too many people fall for scammers who take advantage of their victim’s poor financial situation. Take every precaution to ensure that you have chosen a legitimate company and that they will hold your collateral assets securely. Look around their office and assess how they maintain their workspace, how they treat other customers, and how they respond to your requests. Any title lender should be transparent in their operations and keen to clear up your doubts about how they will manage your assets while you commit to repay.

Search Reviews

Before you decide to go ahead with a contract, another best practice you can follow is to do a quick search online for other clients’ reviews of the title lending provider. As you read these reviews, take notes on their comments about customer services and contractual agreements. Some may require verifying your identity via a phone call, while others may go through the entire application online. These customer reviews may also indicate whether the lender requires visual inspections of your car before releasing the agreed amount. All of these details are essential in determining whether you will be dealing with a reputable company or whether you should steer clear of a potential scam.

Understand repayment terms

Once you have several options at hand, start comparing their fees, interest, and rents. Generally, when you ask for more money, the overall cost will also be higher. If you opt for a longer repayment term, keep in mind that this may impact the total amount you pay back to the company. A rule of thumb for title loans should be a repayment term of between 30 and 60 days, similar to payday loans, and checking that the interest rate never exceeds 30% of your principal.

Depending on the lender, the fine print may specify restrictions that can work against you significantly. For example, they may add penalties associated with prepayments or place mileage restrictions on your vehicle as an excuse to reject it as a collateral asset. Check every detail of every form before filling in your information and remember that you have the right to look at other options and not go ahead with a title loan if you don’t feel comfortable. with that.

Finding financial solutions can become a complex situation without clear guidelines. Some people go through a title loan and may end up worse off if they don’t comply with the repayment options. You must understand the implications written in the contract and work out a savings plan yourself that will allow you to stay afloat and keep your vehicle. And finally, even if it seems a bit obvious: try to choose a lender that will allow you to continue using your car for the duration of the contract. Not all companies have the same policies regarding collateral assets, so keep an eye out if you don’t want to lose your only means of transportation for instant cash!

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.

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.

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.

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

Related links

https://www.maxcashtitleloans.com

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.

Conclusion

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.

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.

Looking for the other side of the story? Subscribe today to access even more opinions.

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.

To fix things, you first need to find out what’s wrong. Support investigative journalism. To subscribe.

“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.

Advantage Finance LLC Now Offers Extended Payment Plans for Auto Title Lending and Title Lending Buyouts in Houston and Area

Stuck in a 30 day title loan? visit our website https://www.cartitleloanshouston.com for a quick quote.

Advantage Finance, LLC, a full-service auto title loan finance company serving Houston and surrounding areas, recognized a need in the auto title loan industry: to provide consumers with an alternative to high-cost auto title loans. short term and interest only. Advantage responded to this need by offering consumers title loan buy-back programs with principal and interest loans with extended repayment periods. Advantage pays off the consumer’s short-term loan by arranging a longer-term title loan with better terms for the consumer. The repayment schedule for these loans includes both principal and interest, which is often less than the interest on the consumer’s original loan. This arrangement helps consumers by leveling their payments and making it easier to repay the loan.

According to an Advantage manager, “We help many consumers who are locked into very short-term home loans; some as short as thirty days. We complete a title loan buyout by arranging for them a new title loan with an extended repayment plan. In these cases, the repayment schedule includes both principal and interest. These are not interest-only loans. This is a great benefit for people as it reduces and smooths out their repayments.

Here’s how the program works. A consumer with a very short term auto title loan (usually 30 days) works with one of Advantage’s representatives to complete what is called a “Title Loan Repayment”. Advantage arranges a new title loan with an extended repayment period to pay off the current short-term loan. Additionally, the repayment plan for this new loan includes both principal and interest, often with a lower interest rate. The consumer is helped in two ways: by reducing the monthly payments and by granting him a longer period to repay the loan. This program is, in effect, a refinance of the original title loan.

“It’s a win-win situation for our customers and for us. We are able to help them restructure their debt, and they can reduce their monthly payments and smooth their repayment schedule. Our goal is to provide a service to the community that is both valuable and fair,” says an Advantage manager.

The Advantage Finance team, with four locations in Houston, offers the most comprehensive set of auto title lending options in the market today. For more information and to connect with one of our professionals, visit our website.

Media Contact:

Advantage Finance, LLC.

https://www.cartitleloanshouston.com/

281-410-5337

SOURCE: Advantage Finance, LLC

NEWS PROVIDED BY

Advantage Finance, LLC. (https://www.cartitleloanshouston.com/)

November 12, 2017 06:00

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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.

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.

TitleMax appeals judge’s decision to cancel and repay title loans

TitleMax has appealed a judge’s decision to cancel and repay approximately 6,140 title loans to Nevada customers.

Thursday’s filing includes no new information, only a motion for judicial review in court for the 8th District. State law requires TitleMax to file a more detailed document within 40 days of written notice.

From the time state examiners from the Division of Financial Institutions visited 42 TitleMax locations statewide twice in 2014 and 2015, the agency ordered TitleMax to stop offering a deferral amendment. grace period payment scheme which, by extending the number of payments from seven to 14, would charge customers more interest.

TitleMax stopped offering the “good faith” product last December. However, Judge Denise McKay ordered the cancellation of the title loan agreements that the clients had entered into with the extension of the grace period after December 18, 2014, and the affected clients were to receive a full refund. Additionally, the fine was set at $307,000, but most of the amount was suspended so TitleMax is only required to pay $50,000.

Although the administrative law judge’s decision was made in an administrative proceeding, TitleMax has the right to appeal to the district court in accordance with state law.

TitleMax and FID declined to comment. However, local TitleMax employees had told customers they would receive reimbursement within 120 days from the company‘s legal department provided the loan was repaid.

Las Vegas’ Alan Clark thinks his title loan is one that needs to be called off. He took out $5,000 on a 2004 Subaru Impreza last December, mostly to catch up on mortgage payments. The first seven payments were interest on principal, about $551 per month, which equaled $3,857. The other seven payments totaled $5,000.

“The interest is ridiculous,” said Clark, who over the past month has traded in the car and paid off the rest of the loan. He said the service can be helpful, but “I think title lending is horrible and I’ll never do it again.”

TitleMax appeals ruling in favor of Nevada state agency by Las Vegas Review-Journal on Scribd

Contact Adelaide Chen, Review-Journal’s Data Editor, at [email protected] Find on Twitter: @adelaide_chen

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.

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.