Sun Mar 31, 2013, 10:40 PM
Newsjock (10,507 posts)
Auto-title lenders (204% APR) thrive in Arizona after payday lenders outlawed
Source: Arizona Republic
Consumer watchdogs sighed with relief after Arizona voters rejected a permanent extension of payday lending in 2008. Payday loans carried triple-digit interest rates that critics said left low-income borrowers trapped in debt, and those high rates were going away.
But the sunset of payday lending only fueled a surge in another form of quick cash for the financially vulnerable: auto-title lending. Like their payday-lending counterparts, auto-title lenders, which use borrowers’ vehicles as collateral, offer short-term loans at triple-digit interest rates, potentially reaching 204 percent.
More than 430 auto-title-lending branches have been licensed in Arizona since 2009, the year after voters rejected payday lending, state figures show. By comparison, from 2000 to 2008, about 160 title-lending branches were licensed with the state.
The rise of title lenders has rekindled a debate over whether these kinds of high-interest loans ultimately help or take advantage of low-income borrowers.
Read more: http://www.azcentral.com/business/news/articles/20130318title-loans-hurt-poor-critics.html
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