Payday and Car Title Loans: Look Out!

The Belleville New-Democrat has an important article today about payday and car title loans, centering around a man who took out a $200 loan to help cover some medical expenses then ended up owing $2,000 on the loan.

In "Cycle of debt: Payday and car title loans," Mike Fitzgerald writes:

The SBC Yellow Pages book for Belleville lists 31 payday or car title loan lenders in southwestern Illinois and St. Louis.

St. Clair County Circuit Court files bulge with more than 500 lawsuits filed against people who have defaulted on their loans in the past three years.

Illinois' rules on payday and car title loans contain huge loopholes, according to a survey by Consumer Federation of America, and only Wisconsin and New Mexico are more loosely regulated.

"Here in Illinois, they have a real opportunity to take financial advantage of people," said Lisa Madigan, the Illinois attorney general and an advocate for tighter regulations governing short-term borrowers.

"They essentially trap them with revolving loans, and they can never get out of debt." Nationwide, the short-term loan industry has prospered mightily since the late 1990s, despite excessive interest rates that have led critics to call it "legalized loan sharking."

For more, read the entire article.