Georgian senator seeks to cap interest rates on car securities lending
A bill proposed in Georgia’s Senate would cap the interest rate on auto title lending and limit the amount lenders could collect in the event of default.
Senate Bill 329 was introduced at the end of January by State Senators Randy Robertson, Chuck Hufstetler, Zahra Karinshak, Ed Harbison and Sheikh Rahman. The bill is bipartisan because Robertson and Hufstetler are Republicans and Karinshak, Harbison and Rahman are all Democrats.
The 32-page long bill specifically seeks to cap interest rates at 36% per annum on any auto title loan issued in the State of Peach. In addition, it seeks to prohibit the lender from continuing to charge interest on the loan after the sixtieth day after the borrower has failed to make a monthly payment by the due date “unless the borrower conceals the motor vehicle ”.
The legislation also describes how lenders disclose the parameters of the title loan.
Other consumer loans of a similar nature are capped by the state and none currently have rates above 60%, but auto title loans fall into a different category next to pledged items. These are subject to interest rates of 25% per month for the first 90 days, and then 12.5% per month every 30 days thereafter, depending on Northwest Georgia News. Consumer advocates for the bill claim that the type of loan is predatory in nature and falls prey to those who need it. They have even gone so far as to call the auto title lending loopholes in the property title industry.
Robertson said The Calhoun Times that he is pushing the measure because of a voter in his district, which includes Columbus, whose “elderly father pledged title to his car to pay his utility bills, then fell into a hole because of increasing monthly payments of the loan’s 166% interest rate. . He also told the newspaper that his bill would “alleviate generational poverty” and “empty jails and jails.”
To help push through the initiative, the bill has been combined with another initiative that includes transferring the regulation of consumer loans like these to the Ministry of Banking and Finance from the current Ministry of Insurance. . This is something that has already been factored into the budget proposed by Kemp for fiscal year 2021.
The measure was entrusted to the Senate Finance Committee, of which co-sponsor Hufstetler is the chairman. He hasn’t had an audition yet.
You can read the 32-page bill in full here.