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Iowa Seeks Controls On Car Title Loans

May 3, 2005

Car Title Loans • Iowa Legislature Urged To Cap Car Title Loans • Loans Secured by Car Titles Trap Borrowers in Cycle of Debt • Car Title Loans the Latest Predatory Lending Tactic • Iowa Seeks Controls On Car Title Loans

Calling them "abusive and unconscionable," Iowa Attorney General Tom Miller says car title loans need strict regulation. He's urging Iowa House leaders to pass a consumer-protection measure that would protect Iowans from this questionable lending practice.

Car-title loans are secured by the consumer's automobile or truck. Lenders actually keep an extra set of keys to the vehicle - and may repossess a vehicle if a lender is delinquent in making one payment.

Miller said there is one car-title loan business in Iowa now, a Georgia company operating a number of branches -- and charging 360% APR interest on its loans.

"Secured lending should be much cheaper, because it is guaranteed by the car," Miller said. "There is no justification for the astronomical interest rates."

"There are legitimate Iowa banks and credit unions that can and do extend credit to these borrowers at far better rates, without putting the borrowers' means of transportation and livelihood at risk," Miller added. "Repossession and loss of transportation to work and health care is a very severe threat to these Iowans," he said.

Miller noted that the Senate approved the car-title loan measure by a vote of 50-0, and other states have banned or severely limited abusive car-title loan practices. The measure "would be extraordinarily valuable to consumers - and to legitimate Iowa businesses," Miller wrote, "and I believe it should be non-controversial."

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