Grand Theft Auto Loans: Repossession and Demographic Realities In Title Lending

55 Pages Posted: 20 Apr 2012

See all articles by Nathalie Martin

Nathalie Martin

University of New Mexico - School of Law

Ozymandias Adams

affiliation not provided to SSRN

Date Written: April 17, 2012

Abstract

This Article analyzes empirical data on one of America’s fastest growing credit products, the title loan. A title loan is a high-interest, deeply over-secured, consumer loan, in which the consumer uses an unencumbered auto-mobile as collateral for a non-purchase money loan. Title loans are made based solely on equity in a car. If a customer has insufficient income to pay the payments under the loan, typically interest-only payments at 300% per annum or more, the lender repossesses the vehicle, many of which have GPS trackers installed for this purpose. Not surprisingly, the repossession rates for title loans are higher than regular auto repossession rates, as well as home foreclosure rates. Prior to repossession, lenders recover their principal many times over. For example, one customer paid over $10,000 on her $4000 loan. Another paid over $11,000 on a loan of $1500. Despite these realities, title loans have garnered little interest in the scholarly world. While legislatures around the nation struggle with how to regulate home loans, credit cards, and other middle class products, title loans go largely unnoticed and unregulated. This Article reports on data about who uses these loans and how often, as well as on repossession rates. It concludes that, given the protections we have provided to middle class consumer credit users, we also should regulate the consumer credit products used primarily by the lower and working classes.

Suggested Citation

Martin, Nathalie and Adams, Ozymandias, Grand Theft Auto Loans: Repossession and Demographic Realities In Title Lending (April 17, 2012). Missouri Law Review, Vol. 77, Available at SSRN: https://ssrn.com/abstract=2041575

Nathalie Martin (Contact Author)

University of New Mexico - School of Law ( email )

1117 Stanford, N.E.
Albuquerque, NM 87131
United States

Ozymandias Adams

affiliation not provided to SSRN ( email )

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
450
Abstract Views
2,943
rank
69,101
PlumX Metrics