Georgia Watch aims to bring fairness to title pawn loans, which are short-term, high-interest loans that require a borrower’s car title as collateral. Title pawn lenders target poor neighborhoods and military personnel with promises of fast cash. Car title lenders are the only lenders in Georgia allowed to charge more than the state’s 60 percent usury cap on loans. Georgia law currently allows car title lenders to charge more than 300 percent APR on small loans despite having a car as collateral. When a borrower cannot keep up with the high monthly payments, a car title lender can take possession of his or her car, leaving the borrower without transportation to work, school or the grocery store. Georgia Watch opposes any bill that increases the potential for consumers to become trapped in a cycle of debt through unfavorable loan terms like those associated with title pawn and other sub-prime lenders.
Though current title pawns are limited to a 30-day transaction, House Bill 353 would have allowed these lenders to make long-term loans for up to 24 months. HB 353 fails to address the primary reason that title pawn loans are so dangerous, namely, very high interest and fees, and the risk of the forfeiture of a car. If any changes are made in the title pawn statute, they should be to benefit consumers, not harm them.
Georgia Watch believes lawmakers should provide consumers with more protections by:
- Making car title loans subject to a reasonable usury cap.
- Putting in place a state regulatory framework to oversee the car title pawn industry.
- Requiring car title lenders to return money over and above the debt after a repossessed car is sold.
- Ensuring the regulation prevents rollovers or renewals of loans that allow lenders to continue charging 25% interest month after month.
Update: In 2017, HB 353 failed a vote in the House before Crossover Day. On the final day of the Session, the language allowing for multi-month and more costly title pawn transactions was amended onto Senate Bill 191, an unrelated bill regarding petroleum pipelines. For the second year in a row, in the final hours of Sine Die, we successfully defeated this harmful amendment and the efforts of the title pawn industry to re-define our usury laws. Georgia Watch continued to monitor legislature that weakened usury limits in the 2018 Legislative Session, and we intervened when needed to preserve our existing usury caps.