Of course, the ads don’t necessarily tell you the easy money is tied to a vehicle title loan, up front. All you hear, see, read and comprehend is the quick and easy money part – an important takeaway message for anyone in dire need of quick cash to help manage an unexpected financial crisis. Americans living from paycheck to paycheck often don’t have a kitty set aside in case the roof leaks…
Lenders, it has been alleged, know this and dangle the carrot of quick and easy money associated not only with a car title loan, but also with predatory lending terms consumers often don’t understand, and can ill afford.
Most states have caps on the interest rates lenders are allowed to charge. However, providers of car title loans and payday loans often ignore the state caps. Some lenders have been known to charge annual interest rates of up to 500 percent.
Mary Dixon, a resident of Mansfield in Texas, knows this all too well. As we have written previously, Dixon was in a positon in 2015 where she required a quick infusion of cash to cover an unexpected family emergency. She possessed sufficient collateral in her 2007 Mercury Mountaineer to qualify for a car title loan of $3,000.
Getting the money was easy. The terms, however, were anything but. A month after taking out that vehicle title loan in Texas, Dixon faced a finance charge of $300. On top of that, she was required to repay $3,351.28 if she wanted to keep her car. Dixon found a way to get out from under the car title loan and retain her vehicle. However, others aren’t so lucky.
There have been horror stories whereby consumers sign over their vehicle as collateral for a vehicle title loan amount that represents a fraction of what the vehicle is worth. When the borrower defaults, the vehicle is often claimed and sold, earning a tidy sum for the loan provider by virtue of having control over the vehicle title.
Various states are attempting legislation to either outlaw the vehicle loan practice, or at the very least legislate a cap on interest rates. Legislators know that in order to remain gainfully employed and fully independent, Americans need their cars to get to and from work, appointments, shopping. This, with a vehicle they have worked hard to buy, and keep. Suddenly losing one’s only mode of transportation to a car title loan shark can threaten job loss, plunging the stricken consumer into poverty.
Some municipalities aren’t waiting for state governments to act. The City of Abilene, in Texas, has been exploring its own measures and the merits of municipal legislation either banning, or regulating vehicle title loans and payday loans at the municipal level.
The waves of anger – and the calls for change – are growing. One legal aid attorney based in Ohio wrote an opinion piece in The Cincinnati Enquirer (04/24/17) with regard to the issue. “I frequently represent people struggling to make payments on payday and car title loans,” writes Nick Dinardo, of Pleasant Ridge in Ohio.
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Dinardo is urging state legislators to support HB 123, a bill in the Ohio General Assembly. The bipartisan bill “will make [car title loans] more fair for Ohio borrowers.”
Many victims of the vehicle title loan are not waiting for municipal or state legislation. They’re fighting predatory lending through a car title loan lawsuit, knowing that vendors expect consumers will take their lumps and simply retreat. Those who fight back with the help of a supportive vehicle title loan attorney can receive compensation for their hardship.