Title loans are big business in the United States, to the tune of $3.6 billion in profits stemming from the $1.6 billion loaned every year. In general, taking out a title loan is about as bad for your financial wellbeing as the profits are good for the lenders.
Although title loans are meant to be a way for people with poor credit to quickly access emergency funds to cover an unexpected car repair or to keep the electricity on after a particularly expensive, hot August, they’ve become the bane of many existences. The astronomical interest rates charged on title loans in states that don’t regulate them has been known to send struggling citizens of the Land of Opportunity into a downward spiral of snowballing debt that has resulted in the loss of many a family vehicle and – in some cases – an eviction notice and subsequent homelessness.
North American Title Loans is one of the larger title lenders in the U.S. and is operated by Select Management Resources, which also owns LoanMax, another huge title lending company. Consider this review a double-header for both of these lenders.
As we proceed with this review, please keep in mind that choosing among various title loan providers is a little like choosing among Federal prisons: If you have to go to prison, you probably want the one that’s the least nightmarish, but in general, all prisons suck, and you really, really don’t want to find yourself in one.
The Good
Let’s start with the fact that North American Title Loans’ website is straightforward and well-written, unlike so many title loan websites that read like a teenager’s desperate plea for a prom date or one of those old-fashioned websites that’s got keywords up the patootie but very little substance. The North American Title Loans website doesn’t try overly hard to convince you that you need a title loan right now, and it doesn’t make false claims about how a title loan is the answer to all of your financial problems. So that’s good.
The site explains the process without waxing poetic. North American Title Loans promises to thoroughly explain all of the terms and conditions and clarify the repayment obligation before asking you to sign paperwork. They also guarantee excellent customer service and the “lowest interest rates in the industry,” which is kinda meaningless since the “lowest interest rates in the industry” are about as low as Saharan temperatures in August.
While North American Title Loans claims to “compare your monthly income to your monthly budget” and help you determine a loan amount that won’t send you too much further into debt, they don’t actually require proof of income except in states where it’s required by law – namely, Illinois.
North American Title Loans points out that they “believe in” working with customers who get behind on payments, and they promise that they’re more interested in working out an arrangement so’s you can keep your ride than they are in repossessing your car.
North American Title Loans will lend between $100 and $10,000, depending on the state’s regulations and whether you have to borrow a minimum amount in order for the lender to bypass state laws meant to protect consumers against financial ruin at the hands of a title loan. For example, in South Carolina, you have to borrow at least $601 so that the lender doesn’t have to comply with regulations governing small dollar loans, which in that state means loans of $600 or less.
One really nice thing that sets North American Title Loans apart from scores of other lenders is that there’s never an early repayment penalty. In other words, if your loan term is three months as opposed to the typical 30 days, you can pay off the loan in full after the first month without having to pay an astronomical fee to offset the sky-high interest payments the lender won’t be getting at your expense.
***Intermission***
So far, North American Title Loans isn’t nearly as hideously patronizing and self-aggrandizing as most other online title lenders, and they appear to have some good, reality-based advice for borrowers and follow best-practices lending policies. If you absolutely must take out a title loan, I’d recommend taking it out through North American Title Loans. I’d also recommend that you choose electrocution over drowning. Just sayin’.
So if that’s all you really wanted to know, then be off on your merry way to financial slavery and take out your over-secured, under-regulated, and ridiculously expensive, predatory title loan. But
if you were hoping to get a little dirt on this title lender, hold on to your sneakers and keep reading.
The Bad
The Better Business Bureau gives North American Title Loans an F rating, not because of any particular nastiness on their part, but rather because of “BBB concerns with the industry in which this business operates.” The title loan industry is not looked upon fondly by advocates of fair lending practices or by consumer organizations that do their best to look out for the financial well-being of America’s citizens, both rich and poor (but especially the poor.)
In addition to a terrible BBB rating, current and former employees weigh in on North American Title Loans on indeed.com and glassdoor.com, which of course can’t be verified and therefore have little real weight. But some of the reviews give you a bit of insight into this company, and that’s always nice, as long as you balance it all out with the cold, hard facts.
For the most part, the employee reviews are fairly positive and include little gems like, “The most enjoyable part of my job was my customers, being able to build such a long term relationship with them to retain their business,” which kinda points to what the experts say, which is that people who take out one title loan end up in a cycle of debt that involves having to take out more and more title loans while sinking further and further into debt. But it’s nice that this employee enjoyed forging long-term relationships with desperate people who would probably prefer to never step foot in their establishment again. Also, “Management was nice and knew how to keep us busy but still knew how to have a good time. They let us play music and talk to each other while we worked.” Aw, now, isn’t that sweet?
But a few reviews made me a little sad, like “Very depressing job to see good people lose their property,” and “Sometimes the customer can be having a bad day or week or just be mean, but as a call center rep you have to take it with a smile on your face.” True, that. It can’t be easy to be on the receiving end of someone who just realized that all of those huge monthly payments were going to pay off the loan’s monthly interest and that the $1,000 principal amount of the loan they though they’d just paid off is due in full at the end of the month.
And then there’s, “It’s really an immoral business where high interest rates rape people. Management is very money hungry. The goal is to keep customers locked into a contract where it seems they can never get out. The benefits suck. The pay is average but isn’t worth the duties and guilt working there comes with.” It looks like the people who work on the front lines of North American Title Loans make about $10 an hour, which means that they’re probably tempted to take out a title loan themselves every now and then! You’d think that an industry with such outrageous profits would be willing to pay their workers a decent living wage, especially considering the aftermath that these employees have to deal with. It can’t be fun to keep a smile on your face when a young mother is sobbing and begging you to not take away the only means of getting her to her job or her kids to school.
The Ugly
Now, North American Title Loans is owned by one Rod Aycox, who entered the title loan business in 1993 with a couple of investors named Alvin Malnik and Kenneth Partiss. Malnik had been linked to organized crime for three decades by law enforcement and investigative journalists, and Partiss was later indicted (and subsequently acquitted) on drug smuggling charges.
Ah, yes, the company you keep. But if you look at the very nature of title lending, there’s no real surprise there.
To his credit, Aycox split from his partners in 1998, due in part to the negative publicity surrounding Malnik and Partiss. He started Select Management Resources, which today operates under the names North American Title Loans, LoanMax, and Atlanta Title Loans.
In the early days, Select Management Resources found itself in hot water more than a few times. In 1998, Aycox’s company faced a Federal class action lawsuit that accused it of “victimizing customers by collecting illegal debts at interest rates that violate both Georgia’s criminal usury statute and Federal truth in lending laws.”
In 2009, the District of Columbia Attorney General sued LoanMax for charging astronomically high, and fully illegal, interest rates. LoanMax settled out of court, agreeing to return repossessed cars and refund the interest charged.
Aycox’s companies have also been busted by reporters for providing interest rates as monthly rates instead of as the annual interest rate, as is required by the Truth in Lending Act. This is a common, albeit highly illegal, tactic to get customers to sign the dotted line. For example, in one instance, a branch manager told a reporter that the interest rate was “35 percent.” Only after the reporter had to ask did the manager admit that this was the monthly rate, and that the APR was actually 420 percent. That’s the difference between a 3-month, $1,000 loan costing $1,087.60 and that same loan costing $2,260. That helps explain why some customers may be having a bad day or a bad week.
The Face of Title Lending
Aycox himself is kinda the grandaddy of title loan companies, and he’s the face of the industry when it comes to throwing shoot-tons of money at politicians who believe that poor people do not deserve to enjoy the same Federal and state protections against unfair lending practices as those with higher credit scores and lots of money in the bank. After all, such regulations might reduce Aycox’s multi-million dollar salary, and while he’s happy to keep other people scrounging around in the couch cushions for change to put gas in the car, he sure as hell doesn’t want to be one of them.
To that end, Aycox lobbies heavily in Washington and in his home state of Georgia, which has the absolute worst title loan regulations of all states, including the one that says title loans are governed by pawn laws, which means that if your car is repossessed and it’s sold for $5,000 to cover a $200 outstanding balance, the title lender can keep the $4,800 surplus! That’s right, in Georgia, the title lender doesn’t have to pass on the extra hundreds or even thousands of dollars left over from the sale of your car once the loan balance is paid off. They can just keep it, Merry Christmas!
In 2005, Aycox told the Atlanta Journal Constitution that his business is “very fair, upfront, and decent.” Mmmm hmmm.
Aycox has dropped over $1.3 million on lobbying against interest rate caps on title loans and any other legislation that might level the playing field a bit. And in 2012, Aycox, his company, and his foundation each contributed $100,000 to the Restore Our Future super PAC, the sole purpose of which is to get Mitt Romney elected as the President of the United States so he and the people who bought and paid for him can work hard to ensure corporations are able to continue to evolve into personhood, and the nation’s poorest people can finally be entirely thrown to the wolves, good riddance to bad rubbish. All to the end of preserving the God-given rights and freedoms of businesspeople to make – and keep – more money.
Ack!
And the Good, Again
Folks, as much as I love demonizing people who fully deserve demonizing, I fully subscribe to the belief that nothing is black and white, and that every soul incarnating on this beautiful, sad little planet has some redeeming qualities. And Mr. Aycox is no different. Even though his charitable giving doesn’t make up for having made his fortune by exploiting the hardships of others, he does throw some serious money at some pretty stellar charities.
According to the 2013 IRS Form 990-PF, the Rod and Leslie Aycox Foundation gave $829,850 to charity (in 2012, that amount was a few hundred thousand dollars higher,) and some of the charities they chose to support reflect the brighter side of their personal values.
Of the money they gave away, $34,000 went to the Fourth Ward Health and Education Center for Youth, $50,000 went to the March of Dimes, and $20,000 went to the educational fund of the National Association of Latino Elected and Appointed Officials (NALEO.)
If you like to support political organizations that promote Christian Family Values, you’ll be happy to know that as of 2014, Aycox and his spare rib have personally contributed over $2 million to State and Federal candidates that embrace those values, such as helping poor children by kicking their parents in the nuts when they’re at their most vulnerable and making every single American live their lives according to the rules and regulations of The Good Book, which, thankfully, mentions absolutely nothing about taking care of the poor, healing the sick, and feeding the hungry. So if Christian Family Values are your thing, you’ll definitely want to contribute to that Great American Dream by patronizing Aycox’s businesses when an emergency comes up and you have absolutely no choice but to borrow money at a 300 percent interest rate so that you don’t have to choose between feeding your children and keeping the heat on.
To be fair, it looks like Aycox does attempt to balance out throwing large sums of money at Christian Family Values by tossing a few bones here and there to candidates whose ideas about family values are grounded in reality, including a number of democratic candidates like Hillary and Barack. So there’s that.
But, You Know, Whatever.
What the hell is this article about again? Oh, right! Title loans! North American Title Loans and LoanMax get four stars apiece, each of which was very hard for me to part with, considering the uglier aspects the industry and the darker side of Mr. Aycox. The four stars are awarded despite a few truly black marks on Aycox’s ethics record, but those incidents appear to be isolated. In the recent past, at least, the records of North American Title Loans and LoanMax are clean, and their websites do repeatedly remind consumers that these companies fully comply with state and Federal regulations. So maybe they learned their lesson?
Based strictly on the overall business practices of these companies, which offer a service to people who use that service of their own free will, North American Title Loans and LoanMax are probably among the most reputable title lenders you’ll find, even though that’s not really saying much.
Do I Have Other Options?
Sure, there are several title lending companies anywhere you search. You’ll get bombarded by quick loan offers, flexible payment terms, and a no-hassle approval process. But the question is, can you trust these companies?
So instead of listing down company information here, let me provide a list of things to consider when looking for a car title loan company instead. Here you go:
First, look for companies that offer reasonable interest rates. This is a crucial factor that has a great impact on the overall price of your loan. Simply put, it will reflect the percentage of the loan amount that you need to pay every due date. To give you an idea, the average interest rate for a car title loan sits around 25%, but if you’ve done your research, you can find companies that offer a more reasonable rate.
Next, check how the company handles transactions. Even by just talking with their representative, you’ll get to feel if you are treated professionally. Usually, businesses that have been in the industry will know how to interact with borrowers professionally. They have the necessary experience to know well enough how to answer all your inquiries directly so they will be able to present the terms of their offer clearly and honestly.
Speaking of honesty, you have to be vigilant when they make the offer to ensure that you catch on to any possible hidden fees that they may charge later on. If something isn’t clear, just ask until everything has been explained and you’re confident that there are no loopholes in the agreement that you are about to sign.
Lastly, don’t forget to research your rights as a consumer as most states regulate laws that can keep you safe from predatory lending.