By Fredrick Kunkle
Published: August 23, 2012
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.