Car Title Loan

Attorneys are investigating potential car title loan lawsuits against predatory lending companies that target financially vulnerable consumers for high-interest loans and force them to use their cars as collateral for the loan. Even though in some cases the value of the title loan is only a fraction the value of the vehicle, if the borrower defaults on the loan he or she is at risk of losing the vehicle.

Car title loans refer to loans where borrowers use the title to their car as collateral on the loan. Predatory lending companies target financially vulnerable consumers, offer them short-term, high-interest loans, and then require the borrower to use the vehicle as collateral for the loan. When the borrower defaults on the loan, the predatory lender takes possession of the vehicle, even if the amount due on the loan is a fraction the value of the vehicle and even if the borrower is only a few days late on payment.

A survey from the Federal Deposit Insurance Corporation found that more than 1.1 million US households made use of auto title loans in 2013. Court documents filed in relation to one lawsuit estimated that in 2008, more than 70 percent of title loans resulted in vehicle repossession.

Losing their vehicle makes it difficult for borrowers to continue to work, drive to important appointments, or otherwise carry out day-to-day activities. Furthermore, attempts to pay back these predatory loans can push borrowers into bankruptcy.

In some cases, the interest rate is as high as 500 percent for loans that last anywhere from a month to two years. Meanwhile, not all lenders follow the rules in the states they operate in. Some lenders, for example, operate without proper licensing in the states they offer loans. Borrowers complain they are forced to sign two documents, one with a much higher interest rate than initially agreed on. Further, some plaintiffs allege when their vehicles are repossessed and sold, they are not given the full amount made on the sale over and above what was owed on the loan.

The Federal Trade Commission and various state agencies have begun looking into car title loan companies, with action taken against companies who allegedly failed to disclose terms and costs of their loans, or who aggressively market their loans and violate FTC regulations.

Attorneys are now investigating lawsuits against predatory lenders across the United States, but especially in Utah and New Mexico. In some states, title loans are illegal or interest rates are capped. Other states allow title loans with no limit on the interest rate. Lawsuits allege predatory lending companies target financially desperate individuals, misrepresent the likelihood of the risk of defaulting on the loan, conceal the true costs associated with paying off the loan, and purposely misrepresent details around the sale of repossessed vehicles to ensure borrower's receive very little once their car is sold.

A class action lawsuit was filed by Judith Tichenor against New Mexico Title Loans on behalf of people who took out a loan with the company and later lost their vehicles (case number 15-810). Other lawsuits have also been filed across the US.

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Last updated on Aug-9-16