Georgians with bad or no credit have an option of pledging their car title to receive fast, short-term financial help. Many of these title pawn customers are contractors who need cash right away. If they can’t buy their supplies, they can’t do their work. Without this option, many consumers are forced to sell their vehicle in time of need. But pawning a car title could get more restrictive if Senate Bill 329 is ever passed.
The knock on these transactions is that they are high interest and can be rolled over indefinitely– potentially creating a cycle of debt for consumers. And a high interest rate is understandable (they are high-risk consumers, mostly with titles to old or unreliable cars). But some consumer advocacy groups have been calling for more restrictions to curb so-called “predatory lending.” Some states have even banned title pawn operations.
Senate Bill 329, sponsored by state Sen. Randy Robertson, R-Cataula, caps title pawn interest rates at 36 percent annually, more akin to how other small-sum loans are regulated. It establishes stricter terms for refinancing and sets limits on how much money a lender could collect upon default. The lawmaker says he wants to follow up on legislation stipulating 37 percent interest-rate caps that the U.S. Defense Department placed on such loans for military members.
“I don’t want to kill business and I certainly don’t want to shut down a lane that a segment of the population may need to get by,” Robertson says. “What I want to do is bring that lane in line with the closest thing to it.”
Bob Reich, CEO of the Atlanta-based Community Loans of America, disagrees with the need for S.B. 329. He says title pawn industry should be regulated by local county and city rules, not by a state agency as the Robertson bill stipulates.
“These are high-risk financial transactions and we look forward to working with the author to educate further about our industry in hopes of allowing the non-banked customers options that would not otherwise exist,” Reich says. Better reform legislation, he emphasizes, would be to adopt regulations proposed in legislation offered three years ago by Rep. Brett Harrell, R-Snellville, which limits loan terms but basically retains the same interest rates. (The Harrell bill died in the 2017 General Assembly.)
