Online Title Lending Company Banned from Business in North Carolina
The company charged interest rates up to 575 percent and repossessed cars illegally
North Carolina residents that did business with an online car title lending company may soon feel some relief.
The lender, which does business as Autoloans, Car Loan, Sovereign Lending Solutions and Title Loan America, is banned from making loans in the state after it charged exorbitant interest rates, withheld loan terms, and repossessed cars with little or no warning.
In a release, North Carolina Attorney General Roy Cooper said that at least 700 North Carolinians took out loans with the company; Cooper's office received eight complaints.
Borrowers who are strapped for cash put their car up as collateral and the lender then charges them average interest rates of 257 percent on loans of between $1,000 to $2,500. North Carolina state law, however, caps interest rates on such loans at 30 percent for licensed lenders and at 16 percent for unlicensed lenders.
The Florida-based company seems to skirt lending laws because it is incorporated in Cook Island, New Zealand and has claimed affiliation with a Native American tribe in Michigan.
The lender charged borrowers interest rates spanning from 161 percent to 575 percent and most of the loans required interest-only payments for the first 11 months and then a final balloon payment larger than the original amount. Borrowers were typically unware of these terms because the lender often misstated interest rates, withheld details of the loan, and failed to give consumers a copy of the written loan agreement even when they demanded one.
When borrowers couldn't make the payments, the lender repossessed their cars illegally. Consumers were given a GPS tracker to install on their cars and a lien was placed on their car titles. If they made a late payment or missed a payment, the lender used the GPS tracker to find and repossess the car.
One family moved their car after the lender threatened to take it away after the borrowers complained about their surprise loan terms. The borrowers took out a $2,900 loan with a supposed interest rate of 18 percent and a final balloon payment of $531. After repeated attempts to get a copy of their loan agreement, they found out the interest rate was actually 218 percent with a final payment of $3,531.
Consumers who did business with the lender will be receiving letters from the North Carolina Attorney General's Office letting them know that the company cannot collect payments or repossess cars under a court order. Towing companies and auction houses have also been notified.
To file a consumer complaint, contact the North Carolina Attorney General's Office.