It’s always the same; the malicious, xenophobic, chauvinistic, bigoted lenders take advantage of innocent, pure, naïve borrowers in the dog-eat-dog world of financial capitalism.
A recent Wall Street Journal article describes that
“Several states are putting curbs on loans backed by car titles—short-term, high-interest debt that critics say too often results in consumers losing their vehicle when they can’t keep up with the payments. Auto-title lending, where the owner of a car hands over its title as collateral, will become illegal in Wisconsin later this year. Virginia will impose new regulations Oct. 1, structuring the loans to keep consumers from falling into a cycle of debt. Illinois last year capped car-title loans at $4,000 and slapped numerous restrictions on the industry. At least six other states have implemented new regulations since 2007.”
Before indulging in what is and is not moral, let us summon up the business model of ‘cash-loan-for-car-title’ businesses.
Essentially, there is no credit check, and therefore no real trust mechanism to base borrowing and lending. In spite of this, one party gives another party a few thousand dollars in exchange for a piece of paper that says they own the rights to the very car they watch drive off their parking lot with their money. All along, knowing that the borrower is cradled by rich men in congress who may at any time write off said debts with a swipe of their pen.