Title-loan industry needs new laws, state senator says
|October 5, 2004|
MEMPHIS — A state lawmaker heading a panel investigating the title-loan business said new laws are needed to regulate the industry.
Since a 1995 state law legalized charging 264% annual interest on car title loans, authorities report a huge increase in the number of firms preying on borrowers with exorbitant rates.
The legislature's Predatory Lending Study Committee met last Friday in Memphis and heard the story of an 80-year-old woman who lost her car and a lender who made $13,000 off the $1,000 loan. Witnesses also said one title-loan company gets extra payments with undisclosed penalties.
''It's baffling to me,'' said state Sen. Roy Herron, D-Dresden, who is committee co-chairman.
''If nobody is looking over your shoulder, I can see how (some) get away with charging fees the statute doesn't allow.''
Title loans aren't regulated by the Department of Financial Institutions, as other loans are, a staff attorney told the committee.
''I don't think I've taken enough showers to get the dirt off me,'' former title-loan worker Paul Miller told the committee.
''This industry is so unregulated. It's easy money. It's despicable.''
Lawyer and consumer advocate Steven Taterka recommended a 30%-a-year cap as it is in Florida or 36%, as in Kentucky.
Many title lenders say they're providing a service to people who cannot obtain a loan any other way.
They say their interest rates are competitive with other types of short-term loans, such as paycheck advance loans or bank overdraft protection fees, and are necessary because their customers are high credit risks who often skip out of the loan.
One business owner said she would welcome new laws, hoping they would take care of criticism centered on the industry.
''I have no problem being under (state) supervision,'' said Annazette McLaurin of Top Dollar Title Loans and Cash Advance.
''It would take the stigma away from the industry.''
Copyright Associated Press