The Virginian-Pilot
©
RICHMOND - A House committee on Thursday killed a bill that would have limited the interest on car title loans to 36 percent annually.
The loans, which require a vehicle as collateral, carry annual percentage rates of over 300 percent. Critics say borrowers often don’t realize that the minimum payments they’re asked to submit may not reduce the principal they owe.
Jay Speer, executive director of the Virginia Poverty Law Center, told the House Commerce and Labor Committee that the legal aid attorneys workng with his center have been deluged with car title cases over the past few years.
One man who took out a loan for $1,500, missed some payments and had his car repossessed, he said. The man has paid $3,700 and has his car back, but he still owes $1,800, he said.
Scott Johnson, a lawyer for Community Loans of America, said the people who use car title loans often have no other way to get a loan.
“We are often times the means to finance painters, landscapers, plumbers,” he said. “These people don’t have any other means of credit.”
Johnson said his company repossessed 6.2 percent of vehicles in 2008.
The committee voted 12-7 to table the bill, HB1809. One member who voted to table it, Del. Mark Sickles, D-Alexandria, said he favors regulation of the industry, but he felt that the issue was too complicated to fix it with an across-the-board cap at 36 percent annual interest.
“This bill was just too blunt an instrument,” he said.
The committee earlier approved a different bill that restricts pay day lenders from offering open-ended lines of credit.
Delicious
Digg
Reddit
Facebook
Twitter
Google
Yahoo
Interest should be capped
Interest rates should be capped at 36 percent. It is unbelievable that our elected official would allow gulible people to be ripped off in this way. Unbelievable!
Telling
Here we have a new President pushing to put caps and alleviate some of burden from credit/lenders upon those who struggle to make payments and as this came up in terms of the predatory payday lenders (Tho there was a standard put in place it did not go far enough)our State representatives prove once again they are more concerned with assisting these creditors then those who who are trying to make ends meet. Our state needs to take a serious look at the the vested interests of the few to the best interest of the majority during this time. No standard of caps of interest rates will cause further devastation for those of moderate income. Surely there is a fair standard that can be put in place.I disagree with the comment from the Delegate, this is not confusing it is as straightforward as can be. Create a standard that is fair and allow the individual who takes out the loan to pay within reason and don't allow the creditor to exploit the one who takes the loan. There is reason that prevails and a necessity to pass theis through now.