Arizona Fair Lending Act Would Ban High Interest Car Title Loans
How to protect yourself when buying a used car
Buying used cars has always been a risk. Here’s what you need to know to protect yourself along the way.
Nicole Schaub, The Republic | azcentral.com
Signature collectors are starting to roll out across Arizona in an attempt to curb one type of high interest loan in the state.
About 20 community groups on Tuesday launched a campaign to label a measure that would cut car loans with high interest rates and, critics say, trap borrowers in a cycle of debt.
The year-long drive for the Arizona Fair Lending Act aims to bring together more than 237,000 signatures to register the measure in the November 2020 ballot. This comes 11 years after the Arizonans defeated Proposition 200, which reportedly extended payday loans indefinitely. An enabling statute expired two years later, ending payday loans here.
“We thought we took over (the predatory loans) in 2008,” said State Senator Lela Alston, a Democrat from Phoenix who spoke at the launch rally in front of a loan store. LoanMax titles located on 15th Avenue and McDowell Road in its neighborhood.
“But these weasels have found a loophole in auto title lending,” she said.
Loans linked to the value of vehicles
Auto title loans allow vehicle owners to borrow against the equity in their cars and trucks, using their vehicle titles. Critics say the loans charge annualized interest of up to 204%. The Arizona Fair Lending Act would not ban lending, but would cap interest at 36%, ban lump sum payments, and restrict other practices.
“I know a lot of friends and family who have used these loans,” said Cymone Bolding, chair of the Arizonans for Fair Lending coalition. One in five people who borrow against the value of their car or truck end up defaulting and losing their vehicle, she said.
Arizona residents pay more than $ 250 million in interest on loans each year, according to a study by the Center for Responsible Lending.
“The job is not done,” said Lee Lange of the Southwest Veterans Chamber of Commerce. “We still have predatory loans in the state.”
Military personnel on active duty are protected against paying more than 36% annualized interest on loans, but guarantees do not apply to veterans and their family members, he said.
An Arizona securities lending group did not immediately respond to a request for comment on this article.
Low Income Coalition
Groups supporting the collection of signatures include the Military Officers Association, the Teamsters, Living United for Change in Arizona or LUCHA, the St. Vincent de Paul Society of Tucson, the Center for Responsible Lending, the Southwest Fair Housing Council and the NAACP.
Groups must collect at least 237,645 valid signatures by early July 2020 to qualify the measure for polling later in the year. Volunteers and paid signature collectors are used in the effort.
Contact the reporter at [email protected] or 602-444-8616.