Consumer News Release
For immediate release - Tuesday, May 10, 2005.
Contact Bob Brammer - 515-281-6699.
Miller Urges Passage of "Car-Title Loan" Bill
He calls the extremely-high-interest loans "abusive and unconscionable."
DES MOINES. Attorney General Tom Miller is urging the Iowa House to pass a consumer-protection measure that would protect Iowans from what he called "abusive and unconscionable" car-title loans. "These are a form of predatory loans that put Iowans in worse financial straits and take business from legitimate Iowa banks and credit unions," he said.
Car-title loans are secured by consumers' automobiles or trucks that they own "free and clear." 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. It was reported earlier this year that at one auction house in eastern Iowa over 150 vehicles have been sold after being repossessed due to auto-title loan collection efforts.
"This is the most abusive lending practice in the state now," Miller said.
Miller joined others at a State Capitol news conference promoting the car-title legislation. "This is one solid piece of legislation that lawmakers still can add to what they have accomplished this year," he said. [Fact sheet on car-title loans, and a letter sent April 28 by Attorney General Miller to House Leaders.]
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."
Miller said car-title loans charge excessive interest rates but do not have to run a credit check to determine if the consumer is able to afford such a costly loan, since the vehicle secures the loan. "That's a huge clue," Miller said. "Offering a loan without regard to the borrower's ability to pay is well-established as a key indicator of predatory lending," he said.
"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 said. "Repossession and loss of transportation to work and health care is a very severe threat to these Iowans."
Miller said he believes the car-title loan measure, now part of HF 882, the "Standings" bill, should be non-partisan and non-controversial. He noted that the Iowa Senate approved the car-title loan measure by a vote of 50-0, and that other states have banned or severely limited abusive car-title loan practices.
"This simple measure would be extraordinarily valuable to consumers - and to legitimate Iowa businesses," Miller said.
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