Protect consumers from harmful predatory lending

Georgia Watch supports the passage of legislation that protects Georgians from predatory, high-interest loans.

Some 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. Now, the Military Lending Act makes it illegal to charge active-duty personnel an interest rate higher than 36%. 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. For these reasons, Georgia Watch supports the passage of Senate Bill 329.

Current Legislation: On January 28, 2020, Senator Randy Robertson (R – Columbus) 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.

Specifically, the bill would ensure that cash loaned in exchange for a car title is treated as a “loan” rather than a “pawn” and would bring title lending into compliance with current Georgia small-dollar lending industry standards. It also would cap interest rates on car title loans at 36% to protect all Georgians, including veterans, in line with Department of Defense protections for active-duty military. If the bill becomes law, it will level the playing field for Georgians by bringing uniformity to small-dollar loans across the state.

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