California Reinvestment Coalition Director of Community Engagement Liana Molina released the following
statement in response to a new report by the Consumer Financial Protection Bureau finding that car title loans
don’t work as advertised for the majority of borrowers, with one in five borrowers having their cars repossessed
by their lender.
“This report shines a light on the murky, unscrupulous business of car-title lending. If any other industry seized
the property of one in five of their customers, they would have been shut down years ago. While the loans are
advertised as a “quick fix” for a money emergency, the CFPB found that more than four in five borrowers can’t
afford to pay the loan back on the day it’s due, so they renew it instead, taking on more fees and continuing an
unaffordable, unsustainable loan.
This practice of renewing loans, which is incredibly harmful for consumers, is where the industry reaps the
majority of its profits. The CFPB found that two-thirds of the industry’s business is based on people taking out
six or more of these harmful loans.
For many car title borrowers, a car is one of their largest assets and is a necessity for them to get to work and to
earn income. But one in five of these borrowers will lose their car because of the unaffordable way these loans
are offered. Losing your car is financially devastating to a working-class family.”
Molina adds: “Car thieves do less harm – at least they don’t take half your paycheck before they steal
The California Reinvestment Coalition is part of a nationwide “StopTheDebtTrap” campaign, which is
advocating for the CFPB to create new, strong consumer safeguards as it designs rules for payday, car title, and
high cost installment loans.
California Data on Car Title Loans and Repossessions:
1. More than 17,500 Californians had cars repossessed in 2014: According to the California Department
of Business Oversight, the charge-off rate for auto title loans in 2014 was 4.5 percent. (17,633 of
2. California consumers pay over $239 million in car title fees annually: A new report from the Center
for Responsible Lending ranked California as #2 for the highest amount of fees paid for car title and
payday loans. The report finds that consumers pay $239,339,250 in fees for car title loans and
$507,873,939 in payday loan fees. (The CFPB is in the process of writing rules to regulate payday, car
title, and installment loans)
1. 1 in 5 car title borrowers will lose their cars: According to the CFPB’s new report, one in five
borrowers will have their vehicle seized by the lender.
2. 4 in 5 car title loans are not repaid in a single payment. While the loans are advertised as a quick, onetime
emergency fix, the CFPB found that only 12% of borrowers are actually able to only borrow once
and pay back their loan- without quickly reborrowing again.
3. More than half of borrowers will take out 4 or more consecutive loans: As the CFPB notes, this
reborrowing also means additional fees and interest in addition to the original loan. While advertised as
short-term emergency loans, the reality for most customers is that a car title loan quickly morphs into an
incredibly expensive, long-term debt, requiring working families to either divert more and of their limited
incomes to paying the loan- or face the prospect of losing the car.
4. 2/3 of profits come from borrowers who renew six or more times: The CFPB finds that the majority of
car title business is based on borrowers who reborrow six or more times.