31 Mar Survey confirms auto title loan businesses predatory lenders
Car repairs, appliance breakdowns–people find they need cash fast. Payday and Auto title Loans companies meet the need. The Pew Charitable Trust surveyed borrowers of auto title loans only. According to Nick Bourke, who is with the organization, a $1,000 loan with fees for one month is $1,250, if paid on time.
“What happens is that most people end up paying interest only fees to renew these loans over and over again, because they can’t find enough money to pay the huge payments that come due out of their next paycheck.” said Bourke.
“Walking along Ellis Avenue, which is a low-income area in Jackson, I counted at least nine payday and auto-title loan shops all open for business within about three blocks.” said Frazier
The Pew Charitable Trust also found more than two million Americans use their car title as collateral for loans annually. The report states auto title loans share the same harmful effects their research of payday loans uncovered. Interest rates are 300 percent. Charles Lee, an attorney with the Mississippi Center for Justice, says, they receive calls from people who have had their cars repossessed for not paying off the loan. He calls the businesses predatory lenders.
“It’s really about education. I really trying to educate people to try to have some type of savings account. I know it’s difficult for people to do that. But if you start with even a small amount, when these small emergencies pop up, they don’t seem to be such major emergencies. You have the small amount of money to pay for those services you need immediately done.” said Lee.
Lee says, for the past five years, the Mississippi Center for Justice has introduced legislation to reduce the risk to borrowers. But none have passed. The Consumer Financial Protection Bureau may require that companies offer smaller payments over a longer period of time and protection against some fees.