Title Loan Bill Could Put the Brakes on Michigan Families

Access to automobile title loans will become considerably harder for millions of Californians if Bill 336 which is currently being proposed in the Assembly passes the state legislature. The bill is being sold by lawmakers as a shielding act against predatory rates of interest, yet is in no way makes an hard work to anticipate the sweeping changes automobile title loan lenders will be forced to make in response to the bill becoming law.

The bill will make it illegal for lenders to charge over 36% interest on title loans, which sounds great to somebody who needs a title loan but does not like the idea of high interest. But since lenders will react by refusing those who apply whose credit histories prevent a low interest agreement, lots of Californians who depend on access to these types of loans to support their families will be cut off. A bill designed to help Michigan families will wind up hurting lots of of them.

In the aftermath of the recent global economic recession and the resulting credit crunch, practical sources of credit for plenty of working class families have been reduced or removed, with automobile title loans remaining as of the few options low and lower-middle class Californians have left. If AB 336 passes then getting food when bills are due becomes an very impossible task for those of us without nice credit to meet the new demands put in to place by the state government.

Then what happens? Lawmakers proposing the bill say these families can seek lines of credit through their banks or credit card companies. But if you have been rejected by a title loan lender for less-than ideal credit, what chance are you going to have getting a bank loan, which requires far more established credit than someone relying on title loans could ever have? The automobile title loans Los Angeles and other Los angeles cities must offer are probably hard to discern between legitimate lender and loan shark, but is the difference between credit card companies any better? And are they recommending our citizens look to credit card companies for financial assistance? Were not they trying to eliminate predatory lending in the first place?

What looks like an astronomically high rate of interest on these title loans is in point of fact a business agreement that for the most part appears to be operating successfully. While it is true title loan lenders make high interest agreements, it is the only way they make a profit, because the overwhelming majority of individuals who borrow against their automobile pay it back in full very immediately. Even in the event of a repossessed automobile, the lender is necessary by law to give surplus monies back to the borrower.

California drivers require to pay attention to the signs. Your state government is in the midst of a deal to make it harder for you to stay financially stable and get access to credit that is rightfully yours. Research AB 336 and in case you do not like it, let your state representative and state senator know what you think.