CFPB Finds One-in-Five Car Title Loan Borrowers Have Vehicle Seized for Failing Woefully To Repay Financial Obligation

CFPB Finds One-in-Five Car Title Loan Borrowers Have Vehicle Seized for Failing Woefully To Repay Financial Obligation

WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) today issued a report discovering that one-in-five borrowers who sign up for a single-payment car name loan have actually their vehicle seized by their lender for failing continually to repay their financial obligation. Based on the CFPB’s research, significantly more than four-in-five among these loans are renewed a single day they’ve been due because borrowers cannot manage to repay all of them with a single repayment. A lot more than two-thirds of automobile title loan company originates from borrowers who crank up taking out fully seven or even more consecutive loans and tend to be stuck with debt for many of the season.

“Our study delivers evidence that is clear of hazards automobile title loans pose for consumers,” said CFPB Director Richard Cordray. “Instead of repaying a single payment to their loan if it is due, most borrowers wind up mired with debt for some of the season. The security damage may be specially severe for borrowers who possess their vehicle seized, costing them ready use of their task or even the doctor’s workplace.”

Auto name loans, also known as automobile title loans, are high-cost, small-dollar loans borrowers used to cover an urgent situation or other cash-flow shortage between paychecks or other earnings.

Of these loans, borrowers use their vehicle – such as a motor vehicle, vehicle, or bike – for collateral plus the loan provider holds their name in return for that loan quantity.

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