CHICAGO - Illinois is getting tougher on car title lenders who charge sky-high interest rates.
New rules, announced Wednesday, affect an industry that has gone largely unchecked by consumer protections. Borrowers fell behind on payments and saw their cars towed away.
The state tried in 2001 to set rules for title loans up to 60 days. But the industry changed loan terms to 61 days or longer to avoid the consumer protections.
The new rules would restrict loans to $4,000 and prevent them from being refinanced more than twice. The “60-day” language was removed.
“Car title loans snare victims at 300% rates” reads the headline in one of the page 1 lead stories, at the top right corner of that page in the Midwest Edition of the Sunday Tribune. The story, written by Tribune reporter Stephen Franklin, is one of the paper’s “CASHED OUT” series, described as “an occasional series reporting on the growing number of Americans who, for the first time in decades, can’t make ends meet, let alone get ahead.”
The 30-paragraph story continues on page 14, where a two-column, black-and-white photograph shows Ledford standing in front of the rear license plate area of his 2003 Dodge Neon, in the garage of his South Side home. The caption reads: Joe Ledford keeps his car out of sight in his Pontiac, Ill., garage so that a loan company cannot repossess it.” The photo was taken by Tribune photographer Zbigniew Bzdak.
The story notes that 16 states permit high-interest auto loans, and that Illinois is the only state with no limit on interest rates lenders can charge.
Ledford’s situation is described in the last five paragraphs of the story, the first reading: “And then there’s Joe Ledford of Pontiac, Ill., whose debt problems have trapped his car.”
Ledford, 30, is on Social Security disability benefits, the story says, and took out a $965 loan at 304 percent annual interest in July 2006 with Title Cash of Illinois. Reporter Franklin writes that the company is owned by an Alabama-based firm with 330 stores in 13 states.
That $965 loan would have worked out to $1,688 in payments over three months, Ledford did not have enough money for the final payment of $1,206, “and the loan has swollen,” Franklin writes.
“Ledford said he has tried to reach a compromise,” the story says, but quotes the regional manager for the company as saying that Ledford has “not made a sincere” attempt.
During a photo shoot Monday to replicate the Tribune photograph, Ledford told a Daily Leader reporter that the main reason he agreed to be interviewed by the newspaper was to let others know about the high-interest loans and prevent what has happened to him happen to others.
He’d also like to see more attention on the subject, maybe from politicians, including local ones.
He said he wants them and others to know how such loans can affect people with disabilities, especially on Social Security disability, and he hopes for some protection for consumers in the car title loan area.
“If I can help someone else, that’s what I want to do,” he said.
