Title Loans, Losing your Wheels

Loans (Photo credit: zingbot)

It’s the lottery of the day when citizens of America don’t have to be broke. Today, there are many options to meet expenses if the cash runs out before payday; one option is known as a Title Loan.

According to an article, “The Unintended Consequences of Cracking Down on Payday Lenders. Payday lenders aren’t the demonic entities they’re made out to be” to acquire this particular loan is fairly easy, “In a payday loan, the borrower writes a post-dated check to cover the loan amount, plus fees. In a car-title loan, the borrower puts up a vehicle as collateral. Since 2010 the number of car-title lending companies in Virginia has more than doubled. Last year, they made more than 128,000 loans, worth an aggregate $125 million. They also repossessed nearly 8,400 vehicles.”

Critics of the loans now lobby to lower interest rates, sources say. CNN reports, “According to a survey conducted for the campaign, 85 percent of Texas voters favor an interest rate cap of 36 percent, similar to rates on high-interest credit cards.The survey of 800 registered voters was conducted for two coalitions, the Texas Fair Lending Alliance and Texas Faith For Fair Lending, in connection with Texas Appleseed. Nearly three-dozen religious and consumer organizations are said to be involved in the coalitions.”

Also included with these entities is the well known Catholic Charities Dioceses of Texas who helps those in need.

The report adds further, “Car title lenders are in a different category than credit card companies or banks and work around usury laws. Thus, title loan lenders are able to charge triple digit annual percentage rates (APRs). Yes, triple digits. It’s not an exaggeration to see 250% APR and higher on these car tile loans and only a handful of states have passed strict laws that prohibit exorbitant percentage rates.”

To read: Why car title loans are a bad idea