New survey shows frequent, serious harm including that more than one in five late-paying borrowers had their car repossessed

OAKLAND, CA – The Center for Responsible Lending (CRL) today issued a new research brief, Under the Radar: Evidence of Prohibited Vehicle-Title Loans Made in 22 States and DC. High-cost vehicle title lending is illegal in 33 U.S. states and the District of Columbia (DC). Through a new survey and analysis of anonymized checking account transactions, Under the Radar reveals title lenders flouting the law in 22 of those states and DC with both in-person and online loans. The survey also contributes new data showing how expensive and dangerous this form of credit is for consumers. The research brief accompanies an additional report released today on high-cost lending, Down the Drain: Payday Lenders Take $2.4 Billion in Fees from Borrowers in One Year.

“Even if high-cost car-title lending is far less widespread where it is prohibited, the Under the Radar report shows that car-title lenders violate the law in many of these states so they can conduct their exploitative business. State financial regulators, state attorneys general, and federal bank regulators should step up law enforcement efforts to protect consumers from getting fleeced and losing a vital means of transportation,” said Peter Smith, senior researcher at CRL. “New survey data in this report should serve as a wakeup call that car-title loans impose immense hardships and states currently permitting this predatory lending should ban it.”

The 23 jurisdictions where CRL found evidence of illegal car-title lending are: Alaska, Colorado, Connecticut, District of Columbia, Florida, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Virginia, and Washington.

The survey uncovering this evidence was conducted in July 2024 by BSP Research, was commissioned by CRL, and assembled a sample of 400 respondents who had taken out vehicle-title loans in the past 24 months.

Key findings of the survey include

  • Vehicle-title loans are very expensive, often unaffordable, and can lead borrowers into a debt trap.
    • Nearly two-thirds of borrowers (64.5%) were unable to make all their loan payments on time and reported paying late at least once.
    • 84.5% of respondents reported a title loan being flipped at least once.
    • About half of borrowers (49.0%) reported a single title loan being flipped twice or more.
    • About half of borrowers (49.0%) reported having taken two or more separate loans in the past two years.
  • Vehicle-title loans have onerous consequences.
    • Among borrowers with at least one late payment, 40.7% reported incurring one or more of the following severe penalties as a result: car repossession, being sued for the debt, or wage garnishment.
    • More than one in five (22.9%) of late-paying borrowers reported their car was repossessed due to late payments.
    • Among respondents whose car was repossessed, the median loan amount was reported to be between only $1,000 and $2,000, a tenth or less of the median repossessed car value, which was between $20,000 and $30,000.
  • Vehicle-title loans are being made in states that prohibit vehicle-title loans.
    • Borrowers residing in 20 of the states, or the District of Columbia, where vehicle-title lending is prohibited, reported having active vehicle-title loans taken out in person in their home states.
    • Borrowers residing in 14 of the states, or the District of Columbia, where vehicle-title lending is prohibited, also reported taking out vehicle-title loans online, which circumvents laws in their home states

To corroborate survey findings of this illegal practice, CRL analyzed financial transactions data from a panel of low-to-moderate income consumers affiliated with SaverLife, a nonprofit that uses technology to improve financial health. Among the 1,085 title lending transactions where the state was identifiable, CRL found 189 lending transactions made in states where title lending is prohibited, 17.4% of the total.

Read the full research brief Under the Radar: Evidence of Prohibited Vehicle-Title Loans Made in 22 States and DC.

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Press Contact: Matthew Kravitz matthew.kravitz@responsiblelending.org