Support legislation to protect Georgians from predatory “car title” loans

Georgia Watch supports legislation to move car title lenders to the state Department of Banking and Finance subject to a 36% usury cap and additional consumer protections.

Many consumers turn to car title loans in times of crisis only to find out later that these small-dollar loans spell big trouble. These small-dollar lenders prey on financially insecure consumers by providing high-interest quick cash loans that trap consumers in a cycle of debt. Georgia law caps most small consumer loans at an interest rate of 60% per year, but a legal loophole allows car titles to be “pawned” at interest rates as high as 300%, rates that would otherwise be considered usurious. To protect Georgians during this financially unstable time, the legislature should:

  • Close legal loopholes to ensure that cash loaned in exchange for a car title is treated as a “loan” rather than a “pawn”;
  • Bring title lending into compliance with current small-dollar loan industry standards;
  • Cap interest rates on car title loans at 36% APR to protect all Georgians, including veterans, not just actively serving military; and
  • Level the playing field for Georgians by bringing uniformity to title loans across the state.

We support the passage of legislation that protects Georgians from predatory car title loans.

Past Georgia Legislation: On January 28, 2020, Senator Randy Robertson (R – Cataula) introduced a bill that calls “title pawns” what they are – loans that should be subject to Georgia’s usury laws. Senate Bill 329, known as the Motor Vehicle Title Loan Act, would close legal loopholes that currently allow car titles to be “pawned” at interest rates as high as 300 percent. On March 3, SB 329 passed out of the Senate Finance Committee and advanced to the Senate Rules Committee. SB 329 remained stuck in the Senate Rules Committee at the end of the session.


Why are high cost title loans a problem?

Amid the ongoing COVID-19 crisis, many Georgians may be feeling more cash-strapped than ever before and wondering how they’ll pay the rent or keep their lights on. More than likely, they’ve also seen a billboard sign from a company offering “Fast Cash!” car title loans. Many consumers turn to car title loans in times of crisis only to find out later that these small-dollar loans spell big trouble.

Small-dollar lenders prey on financially insecure consumers by providing high-interest quick cash loans that trap consumers in a cycle of debt. Georgia law caps most small consumer loans at an interest rate of 60% per year, but a legal loophole allows car titles to be “pawned” at interest rates as high as 300%, rates that would otherwise be considered usurious.

The Department of Defense (“DOD”) witnessed the harms of these high cost loans on military servicemembers and their families and enacted significant protections under the Military Lending Act. These protections do not extend to veterans and non-military Georgians. Recent polling revealed that Georgians want robust protections from these predatory loans. The poll specifically showed that 83% of Georgians statewide believe there should be a cap on the interest rates lenders can charge for these car title loans, while 73% of Georgians statewide believe lenders should be required to assess a borrower’s ability to repay before making a car title loan. We believe Georgia should follow in the DOD’s footsteps and protect all Georgians from these risky products.


Additional Resources:

Protect Consumers from Harmful Predatory Loans

Press Release: Sen. Randy Robertson Introduces Bill to Address Car Title Loans

WARNING: Georgians taking out high interest loans that could cost them their car

Car title loans face interest rate caps in Georgia Senate bill

Payday-Loan Fight Goes Bipartisan in States as CFPB Backs Off

Press Release: Title loan bill passes Senate Finance Committee