The CFPB has issued a report finding that 20% of borrowers who take out a single-payment auto title loan have their car or truck seized by their lender for failing to repay their debt. According to the CFPB’s research, over 80% of these loans are renewed the day they are due because borrowers cannot afford to repay them with a single payment. More than two-thirds of auto title loan business comes from borrowers who wind up taking out seven or more consecutive loans and are stuck in debt for most of the year.
The report examined nearly 3.5 million anonymized, single-payment auto title loan records from nonbank lenders from 2010 through 2013. The auto title report analyzes loan use patterns, such as re-borrowing and rates of default. Single-payment auto title loans are available in 20 states.
Read the report.