Susanna Montezemolo of the Center for Responsible Lending haas written Car-Title Lending. Here is the abstract:
Provides an overview of car-title lending and its impact on U.S. households. Car-title lending — making expensive loans secured by the title of a vehicle a borrower owns outright — has become a multi-billion dollar industry in the U.S. over the last decade. CRL estimates that car-title lenders generate nearly $2 billion in loans annually, with borrowers paying more than $4 billion in fees — twice the amount loaned — in the process. While borrowers in most states are protected from these high-cost loans, 21 states permit these products that trap borrowers in debt and put one of their most significant assets on the line.
This chapter discusses key abuses in car-title lending, including a lack of underwriting, balloon payments, high APRs, loan churning and the threat of repossession. This chapter also updates recent estimates on the size of the car-title lending market and policy recommendations for state legislatures and federal regulators.