Group warns of car-title loans

A faith-based advocacy group is launching a billboard campaign today that seeks to warn consumers about car-title loans.

The Virginia Interfaith Center for Public Policy is spending about $2,200 to display its message for four weeks on two electronic billboards in the Richmond area.

Representatives of the organization of 22 faith-based groups say car-title loans, where a borrower's vehicle is used as collateral, are a form of predatory lending that come with high interest rates. Such loans are currently not regulated in Virginia.

"We have heard from a number of consumers who are struggling to make ends meet. They struggle even more when they get car-title loans," said LaTonya Reed, a policy analyst for the group.

The billboards are on Interstate 95 near Bells Road and on Mechanicsville Turnpike entering Richmond. They say "Hooked by a title loan?" with an illustration of a car being towed away and the telephone number for the car-title loan hot line, (866) 830-4501.

The hot line was established in October by the Virginia Partnership to Encourage Responsible Lending, a coalition of organizations including the Virginia Interfaith Center, and is supported by the Virginia Poverty Law Center. The cost of the billboard campaign is covered by a grant from the Consumer Alliance of Virginia.

The groups are seeking legislation at the General Assembly that would place regulation of car-title lenders under the Virginia Consumer Finance Act, which already governs loans up to $2,500 and caps the annual interest rate at 36 percent.

Phil Kent, director of communications for Fast Auto Loans of Virginia, defended the industry, saying it is an option for people who are struggling financially, lack credit or can't get a bank loan.

"It's very sad that they're doing a billboard campaign in the middle of a credit crisis. Don't they realize working people and poor people are hurting?" Kent said. "This is a lifeline for people who need cash."

Kent said nearly half of his company's customers are "satisfied, repeat customers," and that the industry follows truth-in-lending laws. He said legislation sought by activist groups are often intended to destroy the business altogether. "If there are rogue operators, just like in any industry, they can and have been punished in Virginia," Kent said.
Contact Melodie N. Martin at (804) 649-6290 or .