Those elusive title lenders
March 10, 2009 | Virginia, alternatives, industry | Comments (0)Virginia now has them in their sights. From the story:
When the law took effect Jan. 1, legislators were outraged to find payday lenders evading regulations through the use of Virginia’s open-end credit statute.
Car-title lenders operate under the same statute, which allows companies to charge whatever interest rate they wish as long as no payment is required for the first 25 days.
“Right now car-title lenders are completely unrestricted and unregulated,” said Jay Speer, executive director of the Virginia Poverty Law Center. “There’s no state agency that licenses them or watches over what they’re doing.”
Speer estimates there to be about 200 car-title lenders in the state, compared to a total of 800 payday-loan stores.
Like payday lenders, car-title lenders offer small, cash loans to consumers but use the borrower’s automobile as collateral rather than a paycheck.
“It’s actually in some ways even more damaging than payday lending,” said Sen. Mark Herring, D-Leesburg. “If you don’t pay back, then they take your car. And for a lot of people, that’s their only means of transportation to work or the doctor or wherever.”
Gradually, financial options for consumers are being restricted in Virginia. Where will it end?
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