Rep. Lundy Introduces Bill to End Predatory Auto-Title Lending
State Representative Matt Lundy (D-Elyria) on Monday introduced House Bill 609, legislation prohibiting predatory auto-title lending in Ohio.
“Auto title loans are just like payday loans. They hide behind flashy claims for fast money, but usually lead to a cycle of debt,” said Rep. Lundy. “By allowing predatory short-term lenders to repossess such a valuable asset as a car, we put already-struggling families at risk of further adversity.”
Auto-title loans are secured by a certificate of title to the borrower’s motor vehicle, which stipulates vehicle repossession should the borrower default. Like storefront payday lending, auto-title lending agreements are much more likely to result in overdue payments and default due to high APR, short payback schedules and onerous fees. Auto-title lenders face very few regulations in Ohio, as they have circumvented state law and are selling loans under two lending laws, the Ohio Mortgage Loan Act and through the Credit Services Organization. HB 609 would close this loophole.
“Anyone considering an auto-title loan would be much better off to first try other resources with much more consumer-friendly practices, like a community bank or credit union,” continued Rep. Lundy.
Since August of 2012, the Ohio Attorney General’s office received nearly 130 consumer complaints about predatory auto-title lending.
House Bill 609 is now pending referral to a House standing committee.