With a crackdown on payday lenders, subprime borrowers are increasingly using auto title loans, whose high interest rates can lead to repossession and financial ruin.
News Story, Video (Missouri, NATIONAL, Virginia)
Jessica Silver-Greenberg, Michael Corkery
New York Times (NYT)
December 25, 2014
Read the full article
Tags: Consumer Protection, Predatory Lending
Organizations mentioned/involved: Virginia Poverty Law Center (VPLC), Legal Services of Eastern Missouri (LSEM)
The automobile is at the center of the biggest boom in subprime lending since the mortgage crisis. The market for loans to buy used cars is growing rapidly.
And similar to how a red-hot mortgage market once coaxed millions of borrowers into recklessly tapping the equity in their homes, the new boom is also leading people to take out risky lines of credit known as title loans.
“It is a form of indenture,” said Robert Swearingen, a lawyer with Legal Services of Eastern Missouri, adding that “because of the threat of repossession, they can string you along for the rest of your life.”