Dayton Ohio Bankruptcy Attorney Richard West has seen lots of title loan problems in the Dayton Ohio area in the many years he has filed personal bankruptcy for our community.
Now, the Consumer Financial Protection Bureau (CFPB) is doing something about abusive practices in this area. “About time,” says Dayton Bankruptcy Attorney Richard West.
Soon, we will see sweeping new rules designed to protect consumers who access these low dollar but high interest rate loans.
According to Richard Cordray, CFPB Director (and former Ohio Attorney General), one in 5 borrowers on these types of loans gets their car repossessed.
And, four out of five loans are not repaid in a single payment, as intended, because borrowers cannot afford to do so.
Richard Cordray says that “Instead, those consumers renew their title loans the day they are due. For more than half of the loans, borrowers take out four or more consecutive loans.”
Dayton Bankruptcy Attorney Richard West agrees.
“In 2016, I am seeing more and more abuse, and more of my clients who have financial difficulties have these horrible loans.
Cordray says that, “One in five borrowers of vehicle title loans end up having their cars and trucks seized while many others fall into cycles of debt as they repeatedly roll over their loans, unable to make repayments,” according to the analysis released early Wednesday.
He wants a new rule, which is expected to become effective soon, which will require lenders to ensure loans are affordable for consumers. It is reported that the proposed regulation will also render much of the market unprofitable for payday loan lenders, and auto title lenders as well.
Dayton Bankruptcy Attorney Richard West, who has practiced bankruptcy law for 30 years, says that these title loans are very expensive for consumers, and are backed by a security interest in the clients, automobile. He says it is typical to see 300% interest on these loans.
About 1 million households use vehicle title loans annually, according to the FDIC.
The Charitable Trusts reports that consumer fees total about $3 billion annually.
“After analyzing this data, we found real concerns for consumers,” CFPB Director Richard Cordray said in a written statement. “For those who have to walk away from a loan without their car or truck, the collateral damage can be severe if they experience serious challenges getting to their job or even to the doctor’s office.”