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Tuesday, December 16, 2014

News Hits: State bill to allow car titles to be used for loans dies

Posted By on Tue, Dec 16, 2014 at 8:30 PM

  • Courtesy of Flicker, Creative Commons user Mark Hillary
The News Hits crew was elated to find out a bill introduced in the Michigan Senate didn’t survive this year’s lame-duck session.

The bill introduced by outgoing Senate Majority Leader Randy Richardville (R-Monroe) would’ve allowed auto-title lenders to do business in Michigan under state law authorizing pawnbrokers to operate.

As it was explained by Detroit News columnist Brian O’Connor, it would’ve allowed those lenders to “add a 20 percent monthly ‘usage fee’ so that consumers could borrow against their cars.” So car owners could risk their vehicles for a crazy expensive loan.

If a borrower received, a $1,000 auto title loan over 12 months, O’Connor explained, that would cost them $2,760 in interest alone, “on top of the original $1,000 borrowed.”

Incredibly, Richardville contended this wouldn’t constitute as a predatory loan.

That wouldn't appear to be the case for one single mother in Cleveland. As the Cleveland Plain Dealer reported, the woman borrowed $1,500 from an auto title lender in 2013, but only had 30 days to pay it back. She couldn’t cobble together the necessary payment, and, soon enough, began paying monthly fees to “extend the due date without receiving any additional money,” the newspaper reported. Within months, she paid over $2,000 in fees and still owed $1,700 on the loan.

So, we can only hope, this bill will die a painful death, never to be revived.

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