BUFFALO, N.Y. (WIVB) -Thursday, the New York Attorney General has convinced 10 repossession businesses to cease working with title loan companies.
Some practices by these types of so-called “predatory” loan companies have cost some borrowers to have their vehicles repossessed.
Title loan businesses ask customers to use their vehicle as collateral in order to be granted a loan. This requires signing over the car’s title to a loan company that can charge any interest it wants – sometimes as high as 300 percent, 400 percent, or even 500 percent or more.
Title loan companies can charge these extremely high interest rates when, as in one recent case Call 4 Action investigated, the lien issued against the debtor is actually owned by a company operated from a Native American reservation.
Consequently, the lender has sovereign immunity from state banking laws and is beyond the reach of state and local law enforcement.
One local resident, Scott Kljedys, told News 4 that his mother’s car was repossessed when she could not pay back a $1,600 loan.
“It was literally an online application. Send them the title, they send it back. They wire you the money, that’s it,” Kljedys explained.
His mother’s 2003 Buick became the target of a repossession firm when she could no longer make payments on her loan from Title Loan America, a title loan company based in Florida.
Klejdys claims he can no longer contact or locate representatives from Title Loan America, leaving his mother with an expensive loan she can’t pay back.
He was unsuccessful when he tried to stop a man from repossessing his mother’s car, “At that point I thought I still had the title. He said, ‘As long as you show me a title with no lien on it, I will leave and I will never come back’.”
Klejdys found that the title was still in his mother’s name, but it had a lien on it.
While the loan was made by Title Loan America, the lien is owned by Sovereign Lending Solutions, LLC, a Native American-run business in Michigan.
“These payday loans are the worst of the worst,” says Assistant Attorney General James Morrissey. “And title loans are the absolute worst, because if you fail to pay these outrageous interest rates, the title loan company can then seek to repossess your vehicle, and have done so.”
Morrissey says title loan companies do most of their business online, and all of their business in New York State, over the internet.
“Because payday loans are illegal in New York State, there are no brick-and-mortar stores in New York State. You won’t find one. It is all done over the internet,” he explained.
A lien on your car’s title makes it nearly impossible to sell without paying off the lien first, and the lien can only be removed by the lienholder.
Morrissey led the investigation for Attorney General Eric Schneiderman leading to agreements with 10 repossession firms, including two in Buffalo, to exclude recovery work on behalf of these out-of-state title loan companies.
Less than a day after the agreement, Title Loan America’s website was taken down.
Morrissey says most borrowers who take out title loans are turned away by conventional sources of funding because of poor credit, but advises that you should never offer your car as collateral.
These are the 10 companies that agreed to discontinue repossessing vehicles for predatory title loans:
- Advanced Recovery of New York, Inc. (Rochester, NY)
- ALSCO of Buffalo (Buffalo, NY)
- Buffalo Auto Recovery Service, LLC (Buffalo, NY)
- Del Mar Recovery Solutions, Inc. (Carlsbad, CA)
- Empire Auto Recovery, Inc. (Plainview, NY)
- Minnesota Repossessors, Inc. (Maple Grove, MN)
- Priority Recovery, Inc. (New Windsor, NY)
- Tri-City Auto Recovery, Inc. DBA TCAR Recovery and Remarketing Services (Burnt Hills, NY)
- Victory Recovery Services, Inc. (Buford, GA)
- Loss Prevention Services, LLC (Grandville, MI)