Driven into Debt:
CFA Car Title Loan Store and Online Survey
Jean Ann Fox
Director of Consumer Protection
Cash loans, variously called car title pawn, car title loans, title pledge loans, or
motor vehicle equity lines of credit, are the latest, fast-growing form of high cost, high
risk loans targeting cash strapped American consumers. Storefront and online lenders
advance a few hundred to a few thousand dollars based on the titles to paid-for vehicles.
Loans are usually for a fraction of the vehicle’s value and must be repaid in a single
payment at the end of the month. Loans are made without consideration of ability to
repay, resulting in many loans being renewed month after month to avoid repossession.
Like payday loans, title loans charge triple digit interest rates, threaten a valuable asset,
and trap borrowers in a cycle of debt.
In April, the Center for Responsible Lending and Consumer Federation of
America issued a report titled “Car Title Lending: Driving Borrowers to Financial
Ruin.”1 The report described the characteristics and risks of car title lending, the
industry, customers, and tactics used to circumvent consumer protections in the small
loan market. In addition, the CRL/CFA report proposed a framework of stringent
protections necessary to safeguard consumers.
Consumer Federation of America, with the assistance of volunteers and member
organizations, prepared this subsequent report to learn more about title lending and
consumer protections in a variety of states. The report includes results of 81 store
1 Center for Responsible Lending and Consumer Federation of America, “Car Title Lending: Driving
Borrowers to Financial Ruin,” April 14, 2005, www.consumerfed.org and www.responsiblelending.org.
surveys in 11 states and a review of 17 online title lenders and provides information on
consumer protections that apply to c