Governor Tom Vilsack and Iowa Attorney General Tom Miller joined forces this (Monday) morning to call on the Iowa House to pass a bill that would put a 21 percent limit on the interest on car title loans made in the state. Vilsack says some of the companies that’re giving loans to folks who use their car as collateral are charging over 300 percent interest. Vilsack says car title loans are “one of the worst forms of predatory lending.” Vilsack says after two-and-a-half months, someone who borrows four-hundred dollars from a car-title lender would still owe three hundred dollars after having already paid three-hundred-74 dollars.
Attorney General Tom Miller says those kind of loans are “unfair” and “unjust.”
“There’s been some suggestions by the advocates of this company and this industry that if Iowa does this, Iowa’s going to be somewhat unusual or even unique in prohibiting these transactions. Wrong,” Miller says. “The majority of states — 27 states and the District of Columbia — prohibit this kind of unfair transaction and some of those are rather large states so over 60 percent of Americans are not subject to this kind of abuse.”
Last year the Iowa Senate twice passed bills that would limit the interest rates on car title loans, but Republican leaders in the House refused to allow debate on the bill. Miller says it’s time for the legislature to stand up and protect its citizens. But Osjha Anderson, legal counsel for LoanMax, says LoanMax couldn’t make a profit if the interest rate were limited to 21 percent. “The legislation they want to pass would be less than two percent a month. On a $400 loan, which is our average, that’s $8 a month. We can’t pay our employees. We can’t keep the lights on (with 21 percent interest),” Anderson says. “It’s because the loans are small and for a short term that the rates are so high. It’s not just because of the risk.”
Anderson contends the market demands the higher interest rates, and she says if another company could do it cheaper, they’d come in to Iowa and put LoanMax out of business. LoanMax has been operating in Iowa for 18 months and has “served” over 21-thousand customers in that time period. “And in those 18 months, we’ve had 21 customer complaints and that’s with a lot of media agitation with the attorney general showing people how to complain,” Anderson says. Attorney General Tom Miller says up to 17-hundred Iowans have lost their cars to a car title loan company in the past year.