Senate Study Bill 1299 -- car title loan scams

[CornField]

End car title loan scams

Remember consumer protection? Consumer protection helps consumers and it helps legitimate businesses by creating a level playing field, one where ripoff artists are shut down or punished.

Whatever happened to consumer protection anyway? When it comes to short-term loans, Iowa provides essentially no protection to consumers. In the last several years, out-of-state scam artists have led the charge to squeeze the last dollar out of struggling Iowa families before they go bankrupt. Payday loans, mortgage refinancing scams, “instant” tax refund loans, and now--the newest loan ripoff--car title loans.

Car title loan companies, like other predatory lending scams, charge outrageously high interest rates for short-term loans. When was the last time you took out a loan for 360 percent interest? Few people knowingly do.

The car title loan twist is that they use your car as collateral. It is this unexpected, severely negative consequence, one that makes the car title loan scam unique. Since July of 2004, more than 1,000 Iowa families have lost their cars due to these scams.

It is right to judge these operations by the annual interest rate because, like payday loan lenders, car title scams make the most money from repeat customers. “Having trouble repaying your loan? How about a new loan to pay off your old loan? After all, you don't want to lose your car, do you?”

Car title loan operations are relatively new to Iowa. If the Legislature acts this year, they can prevent the establishment of yet another exploitive industry in Iowa. Republican State Senator Brad Zaun and Democratic State Senator Joe Bolkcom are two supporters of Senate Study Bill 1299.

Zaun and Bolkcom believe it’s not good public policy to allow predatory lenders to extract the last few dollars out of struggling families. We want families to succeed. The Legislature should be removing barriers to financial independence, not turning a blind eye to ripoffs which prey upon people in financial difficulty.

The bill to stop high interest car title loans is in the Senate Ways and Means Committee, a committee not subject to legislative deadlines.

More: http://www.iowasenatedemocrats.org/

Text of Bill: http://coolice.legis.state.ia.us/Cool-ICE/default.asp?category=billinfo&Service=Billbook&ga=81&hbill=SSB1299