Georgia Consumer Should Avoid Car Title Loans
Today’s Atlanta Journal Constitution ran a front page article exposing the slimy underside to Georgia’s Car Title Loan industry. It turns out that Georgia has minimal regulation on car title lenders – who basically serve as a lender of last resort for desparate borrowers.
Georgia consumers learn the hard way that title loan borrowers literally risk the entire value of their vehicles when they take these loans.
The AJC article tells the story of a building contractor named Scott Oden, who pledged his wife’s $13,000 Ford Expedition for a $2,000 loan. Scott was unable to make the payments on time and the title loan store repossessed the vehicle. When the vehicle was sold, however, the title lender kept all of the proceeds. In other words if the vehicle generated $10,000 at auction, the title lender kept the entire $10,000 as Georgia law does not require the lender to refund to the borrower the difference between the loan balance and the sales price.
Needless to say the title loan law in Georgia makes it very profitable for title lenders to find a way to repossess and sell vehicles. In Scott’s case, he contends that a representative from the title lender promised him that he would have a chance to catch up the loan, but he discovered that this verbal promise was not kept.
A representative from the title loan industry argues that title loans are inherently risky and that most vehicles pledged are high mileage, low value vehicles that are often worth less after repo costs than the outstanding loan balance.
Perhaps – but does that not mean that high value vehicles with a lot of equity are especially attractive to title lenders who would like to see nothing better than a default.
Georgia legislator Rich Golick of Smyrna promises to introduce legislation in this year’s General Assembly to end the repossession windfall provisions of current title pawn law. Previous attempts by consumer friendly legislators have failed, although Georgia did manage to end payday lending in the State.
This reminds me of the promises to “work out a deal” made by mortgage lenders to frantic homeowners during the weeks prior to foreclosure Tuesday in Georgia.
So a couple of rules to keep in mind:
1. stay away from car title loans – the lender has a vested interest in your default and will say just about anything to cause a default
2. verbal promises are worth the paper they are written on
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Comments on Georgia Consumer Should Avoid Car Title Loans
Consumers should avoid title loans huh? Well does that mean you will loan them the money when they need it? I guess the fact that they make loans to high risk consumers, with terrible payment histories and horrible credit ratings does not matter. It’s funny how people like you are quick to condemn companies that are making money, just like sorry politicians who do the same thing but take money in return from the same companies they are claiming they want to shut down. Just sickens me that we all live in a free country, but people like you and politicians want to keep business owners, companies and employees from making money.
Title pawn companies fail to tell you that if you don’t pay off your loan with in 30 days, that the monthly payment your making is only to revolve the loan another 30 days, til the next 30 days until you pay the amount in full! They make you believe that the high interest rate tacked on to your payment that you pay every month, is paying off your loan, but it’s not, nothing of the payment goes towards your loan what so ever! How can this be legal?????
I am an attorney who just learned that an employee had this happen to them. I was shocked that this is legal and that there are not some protections out there for consumers who are financially strapped. I am all for the free market, but taking advantage of people who are already financially challenged is just wrong. I want to team with any legislator who is willing to regulate this practice so that the companies can make a fair profit, but not take advantage of disadvantaged consumers to the point of financial ruin. I definitely want to look into this issue more. Please e-mail me with your experiences with title loan companies and maybe we can make a change to these unethical, at best, practices.
@Tim:
Tim, I am an individual who recently became aware of the usurious unregulated practices of these predatory lenders. I am willing to do whatever it takes to either shut them down or bring about fair consumer reforms. please contact me as I am willing to work with you. barakel07@yahoo.com
I am glad to hear there is some political representative interested in doing something about this law. I serve on the board of a non-profit that provides assistance (utilities, rent, emergency housing, etc.) to people who are strapped due to job loss and other poverty issues. I was HORRIFIED to read the code stating that Georgia legalized 187.5% interest for these companies! That last one I saw advertised on TV said you need a job to qualify. I went there posing as a customer and they do file a lien on your car (which the customer pays the charges for). These are secured loans, not pawns. They are just like payday loans; a huge, huge profitable business at the expense of people in desperate straits. Please do all you can to change the law. Two states have capped rates at about 36 percent, which is still pretty high but at least not insanely out of the ballpark.
I did a title loan after i lost my job & have fallen behind in the payments. I was told that the money i was paying because it ewas not the full amount was only to pay the intrest
but the amount keeps getting higher. I think its time to let them have my car. : (
Ms. T, as you have discovered, title loans are a very expensive source of cash. I advise my clients to avoid this type of high interest, short term loan.