Companies in Iowa that grant so-called “car title loans” may no longer charge interest rates of as much as 300 percent. Governor Chet Culver this afternoon signed a bill into law which beginning in July limits the interest rate charged on such loans to 21 percent or less.
“For far too long, car title lenders have preyed upon the most vulnerable Iowans,” Culver says. Car title lenders loan money and the person who gets the loan puts up their car as collateral. Culver says too often, the exorbitant interest rates charged on the loans made it impossible for low-income Iowans to keep up with their loan payments.
“Car title lenders have looked upon these people as an easy target,” Culver says. “Now, in many cases, a family’s car can be its most important asset both in terms of value and usefulness. A car is an absolute necessity for most Iowans.”
About 40 people crowded into Culver’s statehouse office to witness the bill signing. “I want to thank each of you for being here to witness Iowa as we stand up to predatory lending,” Culver told the crowd, which broke out into applause. Critics of the new law say it will deny some Iowans who cannot qualify for any other credit the “last option” of a car title loan.