CFPB Report Finds Many Borrowers Are Unable to Pay Back Auto Title Loans

The Consumer Financial Protection Bureau (CFPB) recently released a study which showed that the vast majority of borrowers who take out a single-payment automobile title loan cannot afford to make the payments and need to take out additional loans to pay it off.

The Consumer Financial Protection Bureau (CFPB) recently released a study which showed that the vast majority of borrowers who take out a single-payment automobile title loan cannot afford to make the payments and need to take out additional loans to pay it off.

The study, which was reported by The New York Times, showed that the car title loans — which are due in 30 days — can keep borrowers in debt for months as extra fees and interest are added to the loan amount. Although those who take out the loan usually have one month to pay it off, some states require the loan to be paid off in as little as two weeks.

Consumers take out a car title loan when they are short of cash or have an unexpected expense. They borrow the money for a short amount of time at a high interest rate and put up the title to their vehicle as collateral. The lender determines the amount based on a percentage of the car’s value and holds onto the title until the loan is repaid.

Of the 3.5 million single-payment loans issued by nonbank lenders and examined by CFPB, about 20% of all borrowers had their vehicles seized for failure to repay. Only 12% were “one and done,” meaning they paid off the loan — including fees and interest — in a single payment within 30 days, the report stated.

Hobson-Williams, P.C. offers a full-service debt collections department that aggressively collects bad debt accounts receivable. The firm’s debt collections attorneys adhere to all federal and state debt collection laws when dealing with debtors. We will handle your debt collection matters with speed and efficiency which results in a high collection ratio. For more information, call 1 (866) 825-1529.

Written by Tanya Hobson-Williams

Appointed to the bench by the Board of Trustees in 2008, and elected in 2009, Tanya Hobson-Williams was the first African-American Female Justice in the Incorporated Village of Hempstead. Tanya Hobson–Williams obtained her B.A. in Government and Politics from St. John’s University and her law degree from Benjamin N. Cardozo School of Law.

Tanya Hobson-Williams has an active elder law practice assisting senior citizens in obtaining Medicaid for Home Care and Nursing Home Care. She routinely lectures at senior citizen centers, assisted living facilities, law schools and counsels families on a variety of topics of concerns to families caring for the elderly.

Author: Tanya Hobson-Williams

Appointed to the bench by the Board of Trustees in 2008, and elected in 2009, Tanya Hobson-Williams was the first African-American Female Justice in the Incorporated Village of Hempstead. Tanya Hobson–Williams obtained her B.A. in Government and Politics from St. John's University and her law degree from Benjamin N. Cardozo School of Law. Tanya Hobson-Williams has an active elder law practice assisting senior citizens in obtaining Medicaid for Home Care and Nursing Home Care. She routinely lectures at senior citizen centers, assisted living facilities, law schools and counsels families on a variety of topics of concerns to families caring for the elderly.

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