Controversial Car-Title Lending Bill Moves Forward in VA

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Feb 23rd, 2011 @ 1:59 PM by Amber Nelson
The Virginia House passed a bill Monday that has tweaked many noses, including those of neighboring states. The bill, which now must go back to the state Senate for a vote, would allow car-title lenders to make loans to out-of-state drivers. The problem is that many of the surrounding states have banned this type of lending, because of its so-called predatory nature.
Car-title lenders operate by lending quick money to individuals who use their cars as collateral. Virginia itself has had a ban on these loans to out of state residents for the past 6-months, but this bill, which is expected to pass in the Senate, would lift it.
Officials in Maryland and Washington D.C. are concerned because they have laws that cap the interest rates lenders can charge on car-title loans. These rules have basically driven out all such lending from their areas. If the Virginia bill passes, residents of Maryland and D.C. could simply hop over to the next state and get a fast loan.
Opponents of these car-title loans say that they take advantage of those in desperate need of cash, applying the highest fees and rates to those who really cannot afford the loans in the first place, and generally result in the borrower losing his car, leaving him worse off than before.
Car-title lenders however, contend that they are simply providing cash to those truly need it but wouldn’t qualify for loans elsewhere because of their poor credit. And they say that consumers are protected by Virginia laws, which require lenders to warn borrowers in writing about high interest rates. The borrower cannot be offered credit for more than a year.

“If you’re a moral busybody and you insist on substituting your moral judgment, your financial judgment and your fiscal judgment for those of every other person in the Commonwealth, then vote against the bill,” said Del. William R. Janis (R-Goochland), urging the bill’s passage, as quoted in the Washington Post.

Interestingly, registered car-title lenders have contributed more than $1 million to Virginian politicians of both parties since 2004.
About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.
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