Ah, the ubiquitous title loan. Such a simple concept – hand over your car’s lien-free title as collateral in exchange for a small loan – and yet such a massive weight of crushing debt that results. In case you’ve been lucky enough to avoid having to take out a title loan, the interest on these loans are incredibly high, to the tune of 300 percent or more annually. That means that if you take out a $1,000 title loan and roll it over 12 times, paying just the interest each month, you will have paid back a total of $4,000 at the end of a year. Do you have that kind of cash lying around? Probably not, if you’re taking out a title loan.
And therein lies the rub: Title loans are predatory, which means that they prey on the people who can least afford them. It’s never a good idea to take out a title loan unless your very life depends on it, in which case you can probably find assistance from someone who won’t gouge out your financial eyeballs. But if you’re going to do it anyway, it’s a good idea to do some shopping around and choose the most reputable title lender and the lowest interest rate you can find. And that’s no easy task. Choosing among title loan companies is like choosing whether you’d rather get drawn and quartered, attacked by a pack of wolves, or thrown off a cliff. Reputable people don’t tend to start up title loan companies, and the lowest interest rate you can find is almost guaranteed to be in the triple digits.
TitleMax: Bad, Terrible, or Horrific?
TitleMax is one of the largest title lenders in the nation, with over 1,400 stores in the 17 U.S. states that only marginally regulate this type of loan, if they regulate them at all. Title loans are illegal in 30 states, and a few others have interest rate caps in place that these lenders haven’t yet figured out how to circumvent by way of questionable tactics. But they will, mark my words: One of the states where TitleMax operates is Ohio, where title loans are actually illegal, but lenders have figured out a really slimy path around the laws. Ohio’s legislators don’t give a rat’s nipple, though, since title lenders are big business and their borrowers are just a bunch of poor, lazy folks who are probably using the money to buy drugs. (I hope you realize that I’m being facetious. I’m one of those poor, lazy slobs, and I put in more hours a day than any of those saggy-bottom blowhards, guaranteed.)
Anyhoo, TitleMax’s website is full of the usual hot air and false promises, and it’s all cheerful to a fault – it’s only when you actually take out a loan that their true nature becomes apparent. Superior customer service, get your life back on track, manageable payments, blah, blah, blah. The website tells you nothing of the 17 percent of borrowers who lose the family car to repossession after defaulting on a title loan, and they mention nothing about how these loans are specifically designed to keep you in a cycle of debt that’s very difficult to break free of. To find out all of that information, you have to dig a little deeper, and if there’s one thing I love above all else, it’s digging a little deeper.
But before I commence with the dirt, I’ll point out two positive things about TitleMax. First, they claim to have competitive interest rates, and indeed, they appear (at times, at least) to charge somewhere between 145 to 182 percent annually, which means that a $1,000 title loan rolled over 12 times will end up costing you from a measly $2,740 to a mere $3,184. Secondly, TitleMax doesn’t charge a colossal fee for paying your loan off before the end of the term. So that’s benevolent of them.
TitleMax Goes to Court
Like most companies who operate within disreputable industries, title lenders tend to get sued a lot, and that’s because $3.6 billion dollars in profits apparently aren’t enough for that particular industry, and anything much lower than TitleMax’s $506 million interest revenue isn’t gonna keep wives in rare furs and children in Swiss boarding schools for very long.
Now, at first glance, according to the Annual Report TitleMax filed with the United States Securities and Exchange Commission, TitleMax reports, “We are involved in a number of active lawsuits, including the legal proceedings discussed below.” And then below, you find that one Reginald Dwight filed a class action lawsuit against TitleMax for entering into loan agreements whose interest rates were above those allowed by law. Title Max settled for $93,000, which means that someone’s wife probably didn’t get this fur coat for Christmas, 2011.
Also in 2011, a Mr. Mignon Norfolk filed a class action lawsuit claiming that TitleMax of Missouri flipped the bird to Missouri law and intentionally failed to pay a number of employees the overtime compensation to which they were entitled. And if you slog through countless reviews on sites like Indeed and GlassDoor, you’ll see that these practices aren’t unique to TitleMax in Missouri, and in fact, it appears TitleMax enjoys slapping titles like “manager” and “supervisor” on employees without actually giving them a raise or additional responsibilities. That way, they can put said employees on salary and then force them to work overtime without compensation. Another similar was lawsuit in 2013 against TitleMax locations across the U.S. on behalf of a number of current and former General Managers in Training who weren’t really General Managers in Training, but rather garden variety employees whom TitleMax didn’t feel like compensating for “excessive overtime hours.”
More recently, a class action lawsuit was filed in 2014 to determine whether TitleMax is liable under the Texas Deceptive Trade Practices Act for violating a number of Texas Finance Codes. Charges include that TitleMax neglected to give customers the required copies of loan documents and in some cases flat-out refused to do so. And that’s how one Kimberly Babb learned that the $1,250 she had already paid toward her $900 loan was only covering the interest payments and that she still owed $1,956.61. Jennie Reed paid $3,250 in interest toward a $933 title loan and then learned she still owed $1722.96. When she asked for copies of the loan documents, the clerk refused, instead saying that they would forward them directly to another location where the payments were made.
Another lawsuit alleges that when a certain TitleMax store employee was trying to hunt down customer Lindsey Ellis’s car for repossession, said employee tracked down both Ellis’s cousin’s ex-girlfriend and her brother-in-law’s sister and sent them a private message asking for information about the vehicle’s whereabouts because “She’s been hiding it for some months, never paid on it.” You would think that TitleMax would better inform their employees about legal debt collection practices, but they don’t seem to have much esteem for laws in general, so yeah, that’s probably too much to ask.
And in August of 2014, TitleMax of Virginia was ordered to pay $117,257 in refunds and credits to 96 borrowers whose cars were illegally repossessed in Washington, D.C. over the course of two years to cover loans taken out in Virginia.
And the list just goes on and on.
Just Desserts, Kinda
In May of 2015, fed-up Alabama resident Robyn Hyden slid into a shark costume and joined ten other sick ‘n’ tired denizens in front of a TitleMax store to protest the predatory lending practices therein. They carried shark-shaped signs reading, “Stop Loan Sharks.”
And my favorite act of protest of all time occurred a few months earlier in Cumming, Georgia, when Chad Artimovich dumped the “rotting carcasses of two dead beavers” in the parking lot of a TitleMax and sped off. It was 90 degrees outside, and the responding officer described the stench of the rotting beavers as “atrocious.” Turns out, Artimovich owed TitleMax $4,000 and was over a month late on his payments. Guess he thought dead beavers would do the trick.
Rating for TitleMax
I’m going to give TitleMax one star. They do have interest rates that are slightly less unreasonable than the 300 to 420 percent charged by the majority of title lenders, but 182 percent is still about as high as Mr. Artimovich might have been when he dropped off his dead, rotting beavers. Plus, the proliferation of lawsuits against TitleMax that pretty much cover the gamut of slimeball maneuvers kinda makes you wish Artimovich hadn’t stopped at just two dead, rotting beavers.
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