Three companies dominate the auto securities lending industry

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The securities lending industry is fragmented, with dozens of players ranging from small family-owned locations to national operators with thousands of locations. It is difficult to follow them as most are private companies. They also frequently hide behind “dba” entities. But here are some of the bigger players:

TMX Financing: Based in Savannah, Georgia, TMX is the largest player in the securities lending industry, operating nearly 1,500 stores in 18 states under the TitleMax name. The 17-year-old company has struggled financially itself: TitleMax filed for Chapter 11 bankruptcy in 2009 when it failed to repay a $ 165 million loan from Merrill Lynch. The reorganized business emerged from bankruptcy almost a year later and has more than doubled its number of stores since. The other brands under which it sells are TitleBucks, EquityAuto Loan and InstaLoan. It has more than 4,300 employees across the country.

Community loans of America: The private Atlanta-based company was founded in 1994 and operates in the South and Midwest under names such as Carolina Payday Loans, Illinois Title Loans, and Fast Auto Loans. It has 1,800 employees and more than 200 sites. The company has been the subject of class actions in the South over allegations of abusive loans to military personnel.

Select Management Resources. Founded in 1998 by former executives of Community Loans of America, this privately held Georgia-based company operates under names that include Atlanta Title Loans, LoanMax, and North American Title Loans. His business website is not functional, but he revealed in a 2007 lawsuit that he has 200 credit bureaus across the country. Its subsidiaries operate in 21 states, from California to Delaware.

PROBLEM STATES

Securities lending is allowed in half of the US states, but some jurisdictions offer less protection than others. Here are some of the worst states for borrowers.

Georgia: The State of Fisheries is the zero point for the securities lending industry. Not only is it home to some of the biggest players in the industry, including TitleMax and Select Management Resources, but it allows lenders to slam consumers with fees banned by other states – fees trade-in fee of $ 250 and car storage fee of $ 5 per day in addition to the annual interest rate of 300 percent. If a repossessed car sells at auction for more than the loan amount, the lender can keep the excess without returning anything to the borrower.

Illinois: There is no limit on the actual interest rates that securities lenders can charge; rates of 200 to 300 percent are common, according to Illinois Legal Aid. State law also allows consumers to borrow the equivalent of half of their monthly income at these expensive rates, making it nearly impossible to repay the loan.

Idaho: There is no limit on interest charges and, like in Georgia, lenders keep excess sales amounts. On the other hand, if a car sells for less than the debt, the lender can sue for deficiency and force the borrower to pay the deficit.

Nevada: Lenders can charge virtually any interest rate. Lawyers for the Legal Aid Center of Southern Nevada said they saw annual charges of 425% or more. Lenders can use private auctions to sidestep the requirements to return excess auctions to borrowers. Lenders are also allowed to continue interest charges for up to 90 days after repossession.

Missouri: At $ 5,000, this state allows one of the highest maximum loan amounts and no cap on interest charges. The lender must repay an excess auction, but can drive out shortfalls.

Florida: The Sunshine State shows how easy it is for title holders to flout the laws. Voters adopted a 28% interest cap in 2000, and securities lending have all but disappeared, said Alice Vickers, director of the Florida Alliance for Consumer Protection. But through its InstaLoan brand stories, TitleMax escapes the caps by forcing borrowers to purchase insurance at rates equal to triple-digit annual interest charges, Vickers said. TitleMax did not respond to the request for comment.


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