Governor Approves New California Law Curbing Predatory Auto Title Loans
Today, October 11, 2019, Governor Newsome approved a bill that will limit auto title loan interest rates to 36% and add other consumer protection measures. Heretofore, auto title loans have been ripping off consumers by charging interest rates of 100% APR or more.
There was never any justification for higher rates because defaults led to the companies repossessing and selling consumers’ cars. Lenders added the cost of repossessing and reselling the cars.
According to the California Department of Business Oversight, in 2016 alone he auto title companies repossessed 20,648 vehicles out of 108,080 title loans.
When car title companies repossess consumers’ cars, it ruins their credit and often creates barriers to getting to school or work.
Many states ban auto title loans, which is what all states should do. But capping the interest rate and adding other protection is a major step forward.