Published July 11, 2017 21:17
HIGH COST LOANS STILL PREVALENT, REFORMS ARE NEEDED
Sacramento, California-July 11, 2017--- Consumer advocates expressed alarm about a new report released yesterday by the California Department of Business Oversight (DBO) focused on installment lending in California. According to the report, 58% of installment loans for amounts ranging from $2,500 to $4,999 that were made last year came with interest rates of more than 100%. And, despite originating fewer car title loans, lenders repossessed more than 20,000 cars in 2016, representing a 22% increase from the year before.
“This report confirms once again that the California legislature needs to develop a backbone when it comes to standing up for consumers instead of for the lenders that are taking advantage of their constituents,” explains Liana Molina, director of community engagement at the California Reinvestment Coalition which advocates for stronger consumer protections. “The California legislature had an opportunity to put an interest rate cap on these loans earlier this year, but sided with industry lobbyists instead. Because of the legislature’s inaction, California’s working families will continue diverting their incomes to paying back unaffordable loans, and in some cases even losing their main method of getting to work, school, or even doctor’s appointments, because of a car title loan. CRC members also believe the California legislature should look more deeply into the commercial lending data in this report to ensure small business owners aren’t being harmed by high-cost loans.”
The report included some positive news. The number of loans made under $2,500 (where interest rates are capped by state law) increased 11.4% from 2015, confirming that lenders can remain profitable while not charging usurious interest rates.