Title lending, in which a borrower’s vehicle is used as collateral, provides small-dollar loans, but often comes with high interest rates and expensive fees. Title loan borrowers are paying triple-digit annual percentage rates (APRs) in Illinois, where there is no cap on title loan APRs or maximum terms.
“Financially vulnerable families are turning to high-cost title loans to try to help make ends meet or cover the cost of an unexpected expense. Soon they find themselves in a cycle of debt that leaves them even more financially fragile,” said Lucy Mullany, coordinator of the Illinois Asset Building Group and senior project manager for financial empowerment policy at the Heartland Alliance.
According to a new report from the Illinois Asset Building Group and the Woodstock Institute, the number of title loans issued in Illinois ticked up by over 37 percent between 2009 and 2013, from more than 73,000 to nearly 100,700.