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Beware Of Car-title Loans

They are everywhere: car-title lenders and other consumer finance lenders using vehicles as collateral. While these companies often advertise their services as quick cash for folks needing to get by in the short term, the reality is often times ordinary people find themselves in long-term debt over relatively small amounts of money.

It seems almost anyone with a car can get some type of fast loan, even with no job or bad credit. Consumers taking these loans simply need to put up a vehicle for collateral in return for some quick cash. Some of the common types of lendings include title loans, title pawns, and consumer finance loans.

Just like a traditional loan one would get from a bank, interest accumulates while the debtor pays off the loan’s balance. Should the debtor be unable to pay back his or her loan, the vehicle is taken in lieu of payment.

Virginia is just one of 21 states to allow these types of loans. Maryland and Washington, D.C. do not. Our area’s proximity to Maryland and Washington, D.C. makes it one of the busiest in the state for these types of lenders.

Predatory car title loans

Even though car-title lenders frame their business as a service to needy, hard-working people, the truth is their operations are nothing but predatory. Some car-title lenders claim their rates are far below the “industry standard”, an easy claim to make given some lenders place consumers in situations that accrue unlimited amounts of interest.

The statistics on loan defaults in Virginia are staggering. Reports suggest that in the last three years, the number of people unable to make their car-title loan payments skyrocketed by 300 percent and the number of vehicles possessed due to default has doubled. Given the fact that interests rates on these types of loans in Virginia is “capped” at 264 percent, it is amazing the numbers are not higher.

A common tactic is for lenders to loan a small amount of money to a consumer in a car-title loan, then extend him or her a higher line of credit with a consumer-finance loan. While car-title loans are subject to some regulation, consumer-finance loans have fewer consumer protections.

Consumer-finance loans still use a vehicle as collateral, but in a different way. Lenders may charge unlimited interest and for longer periods of time. From 2013 to 2014, the number of consumer-finance loans has almost tripled.

Car title loan lawsuits

Over the years, there have been numerous lawsuits and investigations to predatory car-title lenders in Virginia. Car-title lenders are notorious for violating state and federal laws on these lending practices.

In Virginia, if you take out a car-title loan and the lender breaks the law, you may be able to file a lawsuit for your damages. Virginia law gives consumers the right to seek restitution and recover attorneys fees and court costs.

If you feel you were the victim of a predatory or dishonest car-title loan, contact the consumer law attorneys of Whitbeck Cisneros McElroy, PC. Our Leesburg civil attorneys serve clients across Loudoun County and Northern Virginia. Contact us for a legal consultation about your case.

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Whitbeck Cisneros McElroy PC maintains an office in Loudoun County in the Town of Leesburg. We welcome inquiries from throughout the Commonwealth of Virginia and beyond.

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