Study finds high rate of repossessions in auto title loans

NEW YORK (AP) — People who put their cars up as collateral for what are supposed to be short-term emergency loans are being hit with interest rates of 300 percent, a high rate of repossession and long repayment periods.

The report is the first by federal regulators to look at the auto title lending industry, which has grown significantly since the recession but remains banned in half the country.

In one notorious example, Arizona voters effectively banned payday lending in 2008 but, due to a legal loophole, hundreds of payday lenders took out licenses to become auto title lenders.

The proposed regulations to limit arbitration agreements in financial services and rules being written about payday loans all started with CFPB studies.