LOANSTAR TITLE LOANS IN SAN ANTONIO FOR FREE
“There’s no risk.”Īll of the Texas Observer’s articles are available for free syndication for news sources under the following conditions: In just four months, she’d paid her auto-title lender almost $2,500 interest on a $3,000 loan. Jerry Mitchell, an Austin retiree and volunteer who has helped several people avoid repossession, said that the lenders “go out of their way not to repossess, because that kills the caged cow that keeps coming in every month.” One woman he helped had rolled her loan over four times before he intervened. “In many ways, when borrowers fail, lenders actually do better,” he said. What often happens, he said, is that people can’t pay off the loan, so they “roll over” the balance into a new loan, with additional fees. Initial data crunched by the agency shows that Texas has the highest fees for auto-title loans of any state.ĭon Baylor, a senior policy analyst with the Austin-based Center for Public Policy Priorities, said the high rate of repossession is another sign that such loans tend to ensnare consumers in a cycle of debt. Companies must now submit reports to the Office of Consumer Credit Commissioner. However, the Legislature did enact legislation that beefs up reporting requirements.
By exploiting a loophole in Texas’ usury laws, the industry can charge astronomical fees and interest, as high as 1,000 percent APR in some cases.ĭespite impassioned pleas from faith leaders, social-service organizations and consumers, the Texas Legislature has failed to close the loophole or cap fees, as many other states have done. Texas is widely considered a wild west of payday and auto-title lending. LoanStar wasn’t satisfied with just taking her car the company mailed her a letter demanding that she pay $891 to cover towing costs and rekeying fees, in addition to the unpaid balance of the loan. “Just imagine the conversation I had to have with my kids, explaining to them why mommy can’t get to work,” Garcia said. One morning, she woke to find that her car had been towed away in the middle of the night. Garcia said she tried to negotiate a payment plan with LoanStar, but the company sent her straight to collections. She couldn’t even come close to paying off the loan on the income from her minimum-wage job at Goodwill Industries in Austin. “Being a single mom and working a minimum-wage job, it’s really hard to come up with that kind of money,” Garcia said.Īs soon as she took out the loan, Garcia said she realized she had made a mistake.
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The full loan amount plus interest and fees-almost $1,900-was due in 30 days. After appraising her vehicle, LoanStar Title Loans offered to loan Garcia $1,500. A family member suggested that she borrow against her car, a reliable 2003 Chevy Cavalier worth $2,100.
After a relationship fell apart, Garcia found herself in a financial hole, unable to pay her bills. Garcia’s experience is typical, advocates say. It’s the first time the state has collected consumer data from the payday loan and auto-title lending industries.ĭuring the first half of 2012, auto-title lenders seized vehicles on about one out of 10 of their loans-more than 17,000 vehicles in all. Naivi Garcia doesn’t think of herself as a statistic, but she’s one of the many Texans-an average of 93 each day-who have their cars repossessed by auto-title lenders, according to reports from the state Office of Consumer Credit Commissioner.
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