San Francisco, CA, June 30th, 2016: In response to a new report released earlier today by the California
Department of Business Oversight about consumer loans, Liana Molina, director of community engagement at
the California Reinvestment Coalition released the following statement:
“Today’s report proves that while high-cost installment and car title loans are currently legal in our state, they
are causing incredible financial harm for California borrowers. For consumer loans greater than $2,500, there is
no interest rate cap, and it’s clear the lenders are taking full advantage. Sixty-five percent of loans for
$2,500-$4,999 came with interest rates of 70% APR or higher (354,696 loans). For loans of $5,000 to $9,999,
thirty percent of the loans (51,236) had interest rates of 70% APR or higher.
Also troubling is that the number of car title loans increased almost 10% last year in California. This is
especially disturbing since car title lenders also reported to the Department of Business Oversight that they
repossessed nearly 17,000 cars from their customers in 2015. Not only are these lenders originating
unsustainable, high-cost, predatory loans, but thousands of people (about 15% of their customers) lost their main
mode of transportation as a result of obtaining a car title loan. Even worse, of the 16,989 borrowers who hatheir cars repossessed, 10,357 of them had a deficiency balance, meaning the lender will continue to harass them
for more money beyond just taking their car.
The Consumer Financial Protection Bureau (CFPB) announced new, proposed rules earlier this month that
would create national, uniform rules for payday, car title, and installment loans. While the CFPB’s proposed
rules are an excellent first step in curbing the many abuses we’ve seen from this industry, there remains several
loopholes that we believe the CFPB should eliminate in the final rule. We are working with our members, allies,
and consumers to urge the CFPB to ensure their final rule contains no exceptions and no loopholes for this
industry to exploit. Today’s report confirms that it’s time to reign in this abusive industry and implement real
consumer safeguards so that people have access to safe and transparent credit.”