Friday, January 11, 2008

Obenshain Introduces Title Loan Regulation

Sen. Mark Obenshain (26th-Harrisonburg) pre-filed SB565 on 01/09, which regulates "Car Title Loan" lenders, such as LoanMax. Here is the summary of the bill from RichmondSunlight.

Regulates motor vehicle equity loans, which are closed-end loans secured by an interest in a motor vehicle. The measure caps the interest on such loans at 20 percent per month for the first two months and three percent per month for the balance of the term. If such a loan is repaid in full within 48 hours, the loan shall not bear interest. The maximum term of such a loan is 12 months. The maximum amount of a motor vehicle equity loan is 50 percent of the value of the motor vehicle. Lenders are required to be licensed with the State Corporation Commission. A violation of the measure is a prohibited practice under the Consumer Protection Act. Violators are subject to civil and criminal penalties. Making unlicensed motor vehicle equity loans, or arranging or brokering motor vehicle equity loans, is punishable as a Class 1 misdemeanor.

Not a bad deal, really. It caps the interest, but does so that is more advantageous for these companies to profit in the short-term. It also requires them to be licensed with the State Corporation Commission, which should've happened already, and provides penalties for making unlicensed vehicle equity loans. Fairly sensible legislation.

Read the full text here.

Finnegan at hburgnews has a good post on this.

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