Car Title Loan Borrowers Should Be Wary Of Requirements: NPR
Car title loans may seem like a good way to get money, using your car title as collateral, but they can include conditions that lead to financial problems for borrowers.
HOST SCOTT SIMON:
Need money fast? Here is a bad idea. Put the title of your car in exchange for a loan, a loan with very high interest rates of up to 300%. Michael Pope of member station WAMU introduces us to someone who got a card title loan in Virginia and then found himself owing even more of a second loan that he hadn’t even applied for.
MICHAEL POPE, BYLINE: For a lot of unlucky people who desperately want to pay their medical bills or pay the rent, it’s the sound of money.
(Sound clip of the TITLEMAX announcement)
UNIDENTIFIED ACTOR: (singing) TitleMax got your money, your money, your money, your real money, ha-ha.
ACTOR: TitleMax can turn your title into real money.
POPE: It was the late night TV commercial that caught Waverly’s attention. Like the dozen people we’ve spoken to about their securities lending experiences, Waverly didn’t want us to use his last name because he didn’t want future employers to find out he took out a loan. he now says predator.
WAVERLY: It seems so easy to get a loan and, you know, to get in and not have to go through the hoops, I guess, so to speak, to get, like, a traditional loan. So, you know, I decided to stop one day to see when I had no other choice.
POPE: Waverly traveled to that TitleMax town in Richmond and handed the title over to his 2000 Toyota Avalon in exchange for a $ 500 loan. Then we came back a month later to make the first payment …
WAVERLY: I was offered extra money on this loan being that I had – was in good standing or something like that.
POPE: This extra money ended up being a whole different kind of loan, which offered much better terms for TitleMax.
WAVERLY: But it wasn’t explained that it was, like, a consumer credit loan, which I later found out to be who I was.
POPE: It turns out that this consumer credit loan did not offer any of the protections created to help borrowers. There was no limit on the interest rate and the lender could extend it indefinitely. As Waverly explains this to me, we are interrupted by a man coming out of TitleMax and telling us to leave.
POPE: What’s your name?
UNIDENTIFIED MAN: I won’t give you my name, but you must leave the premises.
POPE: OK. Very well thank you.
A spokesperson for TitleMax said it was company policy to avoid responding to media inquiries.
Do you feel like they’ve been honest with you?
WAVERLY: No, I didn’t feel they were being honest and I felt manipulated.
POPE: What happened to Waverly shows the latest trend in auto title lending, as these companies increasingly move into the dark world of consumer loans. Since these are not technically car title loans, regulators do not track the number of automobiles that are repossessed under these loans or the number of people who are missing monthly payments.
For NPR News, I’m Michael Pope.
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