S.C. limited title loans — loosely

Tuesday, March 04, 2008
S.C. consumer groups thought the state had curbed car-title loans with legislation passed five years ago, but lenders found an alternate route, consumer advocate Sue Berkowitz said.

Before 2003, car-title lenders could repeat, or “flip,” a short-term car loan indefinitely. Typically, the loans were for one month and carried fees that were the equivalent of a 300 percent annual interest rate, said Berkowitz, director of the South Carolina Appleseed Legal Justice Center in Columbia.

Gov. Mark Sanford signed a predatory lending bill into law in 2003 that:

• Limited flipping to six times
• Allowed the borrower six months to repay the remainder of the loan — without additional interest — in six equal monthly installments
• Required lenders to show a good-faith effort to determine whether the borrowers could repay the loan

Berkowitz said lenders changed their practices but not in a way that helped borrowers. She said title loans now usually are for a longer period — 12 to 18 months — but still carry fees that often equal an annual percentage rate of 300 percent.

“The industry got themselves an incredibly swell deal. Nobody on the consumer side was happy about it,” she said.

Efforts to reach representatives of TitleMax, a private company based in Savannah and one of the largest title lenders in the nation, were unsuccessful.

Berkowitz said consumer advocates aren’t trying to revisit the issue, because they’re busy pushing a payday-lending bill in the House. Hearings on that bill are expected as soon as late March in the House Labor, Commerce and Industry Committee, led by S.C. Rep. Harry Cato, R-Greenville. The Senate passed the bill last month.

Sources:-http://www.thestate.com/business
/story/335715.html