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Autos

Tuesday, March 01, 2011

California Legislative Alerts:

On this page, Consumer Action highlights important California legislation and other state issues relating to automobiles.

NEW Stop Car Title Usury!

Car title loans are a form of predatory lending notorious for harming low-income Californians. Title lenders currently charge borrowers annual interest rates that can exceed 200%—rates that would be unthinkable for reputable lenders to charge. Title lenders are able to set interest rates at usurious levels due to a special loophole that exists in California, which allows loans in excess of $2,500 to be essentially free of regulation. Once borrowers fall behind (which is very easy to do with a 200% APR), they risk the loss of their vehicle. And after the loss of their main asset, many borrowers no longer have the ability to get to work.

Triple-digit interest rates for title loans should be illegal, and in fact are already prohibited in other states such as Maryland, Indiana, North Carolina, and others.

By establishing a rate cap of 36%, AB 336 (Dickinson) would allow for car title loans with responsible terms, while restricting those designed to trap borrowers in a cycle of debt.

Title lenders falsely spin their ruinously expensive product as a financial life preserver for borrowers who are sinking in debt. But what they offer is not a life preserver; they are throwing a drowning man a brick. Examples here and here illustrate how deceptive and expensive unregulated title loans can be.

Consumer Action supports AB 336.

For more info on the bill, see AB336

To write to your lawmaker about AB 336, use our California Action Tools. Click here.

Tags/Keywords

cars, autos, predatory lending, california legislation

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