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Virginia Becomes Hub for Risky Car Loans

VaPERL — Thu, 30 Aug 2012 17:43:13 +0000

By Fredrick Kunkle

Published: August 23, 2012

When Brenda Ann Covington needed money a few months ago, she had only one big item left to pawn: her Chevy truck.Covington used the 2005 Silverado pickup as collateral to borrow money from one of the growing number of Virginia businesses that lend cash against a person’s car.

It’s a decision Covington now regrets. With an interest rate of around 240 percent, Covington will pay nearly $4,100 to have borrowed $1,500. Worst of all, if she defaults, the lender can seize her truck, which was paid for before she took out the new loan.

“I can’t blame anyone but myself,” Covington, 61, of Manassas, said. “But it’s highway robbery.”

Virginia’s car title-lending business is booming, but consumer advocates say it’s nothing to celebrate. Since a change in Virginia law last year, the commonwealth has become a magnet for people who need cash but live in the District, Maryland or another neighboring jurisdiction where laws capping interest rates have effectively driven such lenders out of business.

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Title Loan Business Thriving in Virginia

vaperl — Tue, 17 Jul 2012 20:57:28 +0000

The Virginian-Pilot Editorial
July 17, 2012

If predatory lenders had a trade publication – say, “Usury Today” – they’d undoubtedly rank Virginia near the top in annual roundups of the best places in the nation to do business.

Although dozens of states have severely restricted the activities of storefront loan sharks in recent years, the Old Dominion remains ever hospitable.

Triple-digit interest rates – scorned by the Pentagon, consumer advocacy groups and most state legislatures – are still welcome here.

Last year, 220 percent was the average annual interest rate in Virginia for folks who borrowed money using the titles to their automobiles as collateral. For borrowers who used paychecks as collateral, the average annual interest rate was 282 percent.

Repeated efforts to cap interest rates at a more modest 36 percent have failed in the General Assembly, thanks in no small part to $1.4 million in donations to lawmakers by the industry between 2007 and 2011 and tens of thousands of dollars in contributions ahead of a vote this year.

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