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CFPB Car Title Loan Research Exposes Sky-high Levels of Car Repossessions and Extent of the Debt Trap Business Model

Wednesday, May 18, 2016
Delvin Davis
Aracely Panameño

The Consumer Financial Protection Bureau (CFPB) today released a research report on car-title lending that underscores earlier independent findings by the Center for Responsible Lending (CRL). Car title loans are high-cost, high-interest loans secured by the title of a vehicle the borrower owns outright. After analyzing millions of records, CFPB found that:

  • One in five borrowers have their vehicles repossessed;
  • 80% of loans are not retired when due;
  • Two-thirds of all lender volume comes from borrowers stuck in seven or more loans.

These findings are consistent with research from CRL's State of Lending report. CRL found that the combination of triple-digit interest rates, averaging 300 percent APR, and the threat of car seizure resulted in borrowers renewing or 'flipping' the same loan an average of 8 times, paying over $2,300 in fees towards a $1,000 loan. In a new estimate released yesterday, CRL found that car title loans drain $3.9 billion from consumers annually.

Delvin Davis, Senior Research Analyst, and Aracely Panameño, Director of Latino Affairs, jointly commented on CFPB’s findings on behalf of CRL:

“For many working families, owning a car not only provides convenience, but access to economic opportunity,” said Davis. “The car is likely worth much more to the consumer than it is to the lender. Knowing this, any debt trap lender with the ability to repossess a car has leverage to keep consumers running on an indefinite financial treadmill. Consumers should not transition from a small and short-term financial shortfall into a worse and long-term financial crisis.”

“The CFPB has a pivotal opportunity to rein in predatory car title lending by enacting a rule requiring comprehensive ability to repay standards,” said Panameño. “A strong rule that is free of loopholes can stop the debt trap, save consumers billions of dollars, and provide a level playing field for lenders across the board.”

For additional resources see:

For more information, or to arrange an interview with a CRL expert, please contact Charlene Crowell at charlene.crowell@responsiblelending.org or 919.313.8523