Cash for Car Title Loans

In auto recycling junk cars we encounter many vehicle owners trying to scrap their vehicles with an existing lien from “cash for car title” lenders. Those in the vehicle scrap business are unable to buy a car if you have any type of outstanding loan. In the December 12, 2014 edition of the Sacramento Bee, Claudia Buck posted an article titled ‘State urges California consumers to be wary of auto-title loans’ with the following information: “They’re commonly called cash for cars loans. The state is reminding consumers to be wary of auto-title loans, where personal vehicles are used as collateral for a cash loan – often at crushing interest rates. These loans, often peddled to consumers with poor credit ratings and few borrowing options, have been around for years, but California officials report there’s been a spike in recent years. The number of auto-title loans jumped 140 percent in the last three years, from 38,148 to 91,505 between 2011 and 2013, the DBO said. At the same time, the amount of principal on those loans grew 150 percent, from $133.9 million in 2011 to $334.8 million in 2013. One Sacramento woman, Shanell White, is suing an auto-title loan company that she says excessively charged her more than $11,000 in interest, payments & penalties over 3 years – on a $3,900 loan against her aging Lexus SUV. The case, filed last summer in Sacramento Superior Court against Wilshire Commercial Capital of Los Angeles, is in arbitration.” White’s attorney, Bryan Kemnitzer of San Francisco feels these lenders employ loan-sharking tactics. “If borrowers fail to make the payments, their cars can be repossessed. And in some cases, lenders can remotely disable a car’s engine using GPS tracking devices. State law does not limit interest rates on consumer loans of $2,500 or more. In 2013, virtually all auto-title loans – 99.99 percent – were above that amount, meaning there was no cap on interest rates. In most cases, the annual percentage rate on those loans ranged from 70 percent to 100 percent and higher, the DBO said.” To view the complete article read here: http://www.sacbee.com/news/business/article4457825.html

As I mentioned above, in auto recycling junk cars we encounter these borrowers all too often. It doesn’t seem that the volume of cash for car title loans in the greater Akron area are anywhere near the number issued in CA, but either way they are “on the fringe” of being predatory. It is another of Americans living beyond their economic means. Here are (5) key points regarding these loans:

1. The borrowers of these loans likely had poor credit when they initially purchased the vehicle and entered into a high interest loan.
2. These borrowers are not focused on saving money, but contrarily are blind to the fact that continuously borrowing to receive quick cash, just leads to greater long-term financial problems.
3. This type of lending is at (or near) it’s peak and will be curtailed by government action, probably in the next year or so; they are strikingly similar to the “payday” loans and “income-tax refund” loans, that peaked several years ago before the government levied restrictions on them.
4. Used automobiles eventually will need costly repairs and the vehicle owners obtaining these loans, lack the savings to cover such repairs, which leads to the inevitable vehicle scrap.
5. When you obtain a title loan you lose the ability to sell the vehicle until the debt is paid. What will the borrower do when they owe money on a vehicle that they do not have the money to fix and is now a non-running vehicle? The answer is probably to start the process over by obtaining another high-interest loan subprime vehicle loan.

Barberton Junk Cars is involved in auto recycling junk cars; we provide vehicle scrap and removal services and offer a junk car quote over the phone or online 7 days a week. Looking for a scrap car buyer in Silver Lake, Copley or Coventry Township? Do you need to sell a car for cash in the areas of Barberton, Bath, Clinton or Cuyahoga Falls? Residents of Fairlawn, Firestone Park and Norton should call 330-732-JUNK for a junk car quote and same-day vehicle scrap and removal services. Those seeking vehicle scrap in Mogadore, Stow, Green and Monroe Falls are encouraged to visit https://www.barbertonjunkcars.com for a junk car quote, which includes free towing. We pick-up cars throughout Summit County, including the cities of Peninsula, Tallmadge, New Franklin and Kenmore.