newskaren kallay car title loans are no quick fix for the poor

Karen Kallay | Car-title loans are no quick fix for the poor


Phil Kent, communications director for Fast Auto Loans, made several pertinent and interesting points in his Dec. 18 (Fredericksburg) Free Lance-Star op-ed, especially noting the value of car-pawn loans in these credit-strapped times.

He also observed that the car-title pawn business is “an honest transaction between two willing parties.”

Whoa! It’s really more like taking candy from a child, or standing at the lifeboats on a sinking ship, keeping out everyone but those willing to sign on for a high risk of future financial ruin.

The child in this case is that part of us that comes to the foreground when we’re desperate, that yields to wishful thinking, and that doesn’t think too clearly.

Otherwise, we’d see that the full balloon payment that is due within a few months (or less) probably wouldn’t be payable, and that we’d be trapped in a very expensive financial sinkhole.

According to the Center for Responsible Lending, “Although high-priced title loans are illegal in most states, the title lending industry has grown tremendously in recent years in states that have failed to take adequate steps to protect borrowers.

“Title lenders have made generous campaign contributions, and industry-friendly laws have passed in some states at breakneck speed.”

Yes, there’s a place for car-title loans, but not at interest rates annualized at more than 300 percent, and where the car at risk of repossession is the family’s access to employment.

I hate to say it, but during this next legislative session in Virginia, any legislator who resists closing down this loophole on predatory lending will make me suspect that some personal advantage rather than community benefit is motivating him.


– Karen Kallay resides in Fredericksburg.



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