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Wall Street Predators Want A Piece of Your Used Car
http://www.dailykos.com/story/2014/12/25/1354083/-Wall-Street-Predators-Want-A-Piece-of-Your-Used-CarThe Bailout Barons of Wall Street have found a new way to package and sell rancid securities and lay the groundwork for another subprime debacle, exploiting the poorest, most vulnerable Americans by gambling on high-interest loans hawked by a new breed of noxious bottom-feeder: the subprime auto title lender:
Title loans are becoming an increasingly prevalent form of high-cost, short-term credit in subprime finance, as regulators in a number of states crack down on payday loans.
For many borrowers, title loans, also sometimes known as motor-vehicle equity lines of credit or title pawns, are having ruinous financial consequences, causing owners to lose their vehicles and plunging them further into debt.
A review by The New York Times of more than three dozen loan agreements found that after factoring in various fees, the effective interest rates ranged from nearly 80 percent to more than 500 percent. While some loans come with terms of 30 days, many borrowers, unable to pay the full loan and interest payments, say that they are forced to renew the loans at the end of each month, incurring a new round of fees.
For many borrowers, title loans, also sometimes known as motor-vehicle equity lines of credit or title pawns, are having ruinous financial consequences, causing owners to lose their vehicles and plunging them further into debt.
A review by The New York Times of more than three dozen loan agreements found that after factoring in various fees, the effective interest rates ranged from nearly 80 percent to more than 500 percent. While some loans come with terms of 30 days, many borrowers, unable to pay the full loan and interest payments, say that they are forced to renew the loans at the end of each month, incurring a new round of fees.
With triple-figure interest rates it didn't take long for Wall Street to stick its nose into these schemes. Title lending companies (the article cites "TitleMax" and "Cash America" as examples) have taken advantage of the sudden attention being paid to them by private equity firms to churn out more and more abusive loan products targeting poorer Americans with cash flow and credit problems. In a variant of the "reverse mortgage' boon, these lenders run late-night TV commercials featuring crass come-ons such as Christmas stockings full of cash, urging people to transform their paid-for used cars into cash cows:
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