Filed under: Government/Legal, Ownership
A fight is brewing in the Michigan state legislature over whether to allow auto title loans (pictured above in California). This type of lending allows people to borrow against the value of their car while they keep driving it, but the money often comes with astronomical interest rates. Critics allege it’s a form of predatory lending, but Michigan Senate Majority Leader Randy Richardville (R-Monroe) disagrees.
Richardville introduced the bill on November 6 that would consider auto title loan companies as pawnbrokers in Michigan. According to The Detroit News, the state limits pawn interest rates to 3 percent a month or 36 percent a year. The proposed law would allow for an additional 20 percent per month as a usage fee to create 276 percent annual rates for people borrowing against their car. The House is also trying to pass such a provision.
Dozens of groups have come out against the bill, including the Michigan Pawnbrokers Association. According to The Detroit News, one in six people who take out an auto title loan eventually lose their vehicle from not being able to pay back their loan. Lobbyists in the state allege that the proposed law is backed by one of the country’s largest title lenders. "We don’t allow predatory lending," said Richardville to the press, according to The News.
There’s no set date for the Senate to vote on the bill. Though, according to The Detroit News, it was introduced in such a way to avoid going through committee and could be decided at any time.
MI senator says 276% car loans are not ‘predatory’ originally appeared on Autoblog on Fri, 12 Dec 2014 18:31:00 EST. Please see our terms for use of feeds.
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