Unlicensed title lenders defy state laws
Two lenders offering loans that charge consumers exorbitant, triple-digit interest rates to borrow against their cars are operating in defiance of state law in Michigan, often seizing the vehicles of desperate borrowers who can’t pay.
These unlicensed lenders are issuing auto-title loans, which charge interest rates of more than 250 percent. They require borrowers to sign over the titles to their paid-off cars and don’t issue loan documents. The borrowers typically get 25 percent or less of the vehicle’s value, and can pay thousands of dollars in interest in a year or less. In many cases, the title lender won’t advance the cash until the borrower installs a GPS unit sent by the lender, to make it easier to repossess the car.