Car title lenders show their true colors in a misleading ad campaign
By Angela Martin of Portland, Oregon. Angela is an economic-fairness advocate at Our Oregon. This is part one of two.
In a classic scare tactic move, the national car title industry is running an ad on Oregon television claiming that car title loans save lives.
The campaign is sponsored locally Northwest Title Loans and highlights a Salem senior citizen who says she turned to a car title lender when she ran out of money to buy her monthly insulin supply.
In the ad, the customer says that without a car title loan, she would die. Here's the ad:
In reality, anyone in Oregon who needs life-saving medicine has more affordable and reasonable options than going to a loan shark. These companies prey on consumer fears in order to convince them that they have no other choices.
Taking a loan against your car means facing 300 percent interest and loan terms that result in paying back three times the value of the original loan. These high-cost loans can only make their situations worse and could mean the repossession of their cars. For many people, that means no way to get to work to earn the money to pay back the loan, creating a hopeless cycle.
As an example, last year The Oregonian reported on a typical experience from Northwest Title Loans: a man borrowed $400 against the title of his car. Under the contract, he was required to pay $129 per month for 12 months – a total of $1,548.00.
Anyone in Oregon who needs life-saving medicine can get real help that won't send them into debt from many other sources.
And what happens next month, when it's time for more insulin? Thanks to the high interest rates of the car title lenders, she'll have even less money and be less able to pay. That's how predatory lenders trap people into long-term debt.
Lobbyist admits customers were bribed
This misleading ad isn't the only dirty trick by the car title lenders – they have been enticing their customers to call lawmakers by giving them Starbucks gift certificates. When Sen. Floyd Prozanski of the Senate Commerce Committee asked Northwest Title lobbyist Mark Nelson about it during a committee hearing today, Nelson admitted, "It did occur. It was my understanding that it ended quickly." Other lawmakers say they have heard that customers are forced to call in opposition to regulations before they receive their loans.
No surprise that Northwest Title Loans would use mafia-like intimidation practices, given its history. More on that tomorrow. In the meantime, get involved to stop loan sharking in Oregon.
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March 26, 2007
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Mar 26, '07
Loan Shark sums it up.
Isn't usurya sin?
Mar 26, '07
No doubt these outfits are dens of usury and their ads tend to cause me to shake my head in disgust. However, my disdain is not directed solely toward the proprietors of these operations. I know from experience that several of their customers are smart enough to know better yet choose to make poor decisions with money. That's on them.
There's a part of me that wants to agree that the state should impose tough regulations on these businesses, in effect driving them out of business, but that argument never quite makes it over the hump. It always conjures up way too many other "BAD" things that we as a society would be better off without that government can not save us from. In the final analysis, I gotta go with Caveat Emptor.
Mar 26, '07
To quote Army Counsel Joe Welch's words to Joe McCarthy: "Have you no decency, sir? At long last, have you left no sense of decency?"
(Rhetorical question -- no answer needed or expected.)
Mar 26, '07
Why is Oregon the dumping ground for these bottom feeders? Can't we just bring back Phil Rizzuto and the Money Store... Oh that's right they are losing their @%* in the sub-prime market. Which begs the question "who is gonna want repo-ed gas guzzlers? anyway"
Mar 26, '07
Wow if that wasn't so pathetic it might be funny.
Mar 26, '07
The mafia only charges 165% on average, so comparing them to the mafia loan sharks insults loan sharks. This bill will not force them to close, just reduce the level the level of usury they set to a more than generous 36%. They will still make plenty of money.
Mar 26, '07
Mandating a 36% APR cap (or equivalent) will cause these outfits to fold in short order. Nobody is going to want to play around with such high risk loans at that rate of return. Not when some borrowers are routinely paying upwards of [PAUSE TO CRINGE] 500% + on the initial amount borrowed.
If it's putting these joints out of business you're after, that's a sure fire way to go about it. Just be upfront about your intentions.
Mob loan sharks may offer somewhat better rates, but the fees and penalties are far more severe. If forced to choose, it's no contest between the payday lender at the local strip mall and dealing with Paulie Walnuts.
3:47 p.m.
Mar 26, '07
I get tired of "high risk loans" been used in conjunction with car title loans and payday loans.
These types of loans have some of the highest repayment levels of all loans. They're some of the least risky in the industry.
If you don't pay, they take your car and sell/auction it. Don't get the full amount due? They take you to court. Same with payday loans. They then have money taken directly out of your check, including all court fees.
The reason why there are so many of these loan places is because they're low risk and high profit.
Mar 26, '07
Fair enough. Perhaps "high risk borrowers" would be a better choice of words. Doesn't change the fact that nobody will want a piece of that action with the aforementioned cap in place. Who knows, maybe that's a good thing, but I'll stick with the laissez-faire approach.
On another note, am I the only one chuckling at some of the banner ads above this very post? I realize it's unintentional and in no way represents a BlueOregon endorsement, but it's still pretty darn funny. Think I'll have to pass on fast-cash-personal-loans.com and snappypayday.com, thank you. Also not in the market for an exorbitant interest rate on a used auto loan. Younger readers take note. Manage your resources wisely and work to build and maintain a good credit rating. Fair or not, you will be heavily scrutinized based on that criteria.
5:45 p.m.
Mar 26, '07
I can't watch the video on my computer at work, but I'll take a look at it tonight.
Anyone want to come up with a parody video?
Mar 26, '07
<insert your="" favorite="" political="" ad=""> show their true colors in a misleading ad campaign
Who's sleazier Politicians or Car Title Lenders?
9:03 p.m.
Mar 26, '07
Doesn't change the fact that nobody will want a piece of that action with the aforementioned cap in place.
Not that I'd miss them if they all disappeared, but I'm not convinced that "fact" is actually true.
9:12 p.m.
Mar 26, '07
Banks and credit unions offer the same types of loans, and if I remember correctly from their testimony last year they are limited by federal law to an even lower percentage.
These banks and credit unions wouldn't offer them if they weren't profitable.
9:13 p.m.
Mar 26, '07
I think the comments about how easy it is to find crucial medication with no money are too glib. Some of the resources mentioned only apply to a narrow group of folks and even group discount prices are too much when you just haven't got the cash. I think we'd be appalled if we knew just how many people in Oregon are having their life expectancies severely curtailed by their lack of access to crucial medications.
(Obviously, I'm not arguing that payday and title loans are going to make that better.)
Mar 27, '07
Isn't (as the cliche goes) the "elephant in the room" here, WHY the poor little old lady HAS to hawk her car for the life saving medication she needs every day for the rest of her life, in the first place??
Man, THAT says more about Oregon (and the country) than anything - these legal loan sharks are just the icing on the cake.