“Car Title” Loans latest Scam

The Consumer Fedration of America reports that some companies are now making high interest loans secured by titles to cars with no loans oustanding. These lenders target high risk, cash-strapped borrowers.

“Title loans trap borrowers in perpetual debt through unaffordable balloon payments, high interest costs and the threat of repossession” said CFA Consumer Protection Director Jean Ann Fox.

The CFA found that monthly finance charges on these loans were as high as 25 percent per month. Annual rates are usually not posted because they are unbelievably high. The Mafia would be proud of these rates!

The CFA blames weak state laws for allowing this usury to go on. Many states have weak laws, but for those who live in states with stronger rules, there is always the web. New Mexico and Delaware allow online lenders based in their states to target consumers nationwide.

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