The state agency that regulates car title loans, which often have yearly interest rates exceeding 300 percent, has imposed new restrictions to reduce the risks to people who borrow against their trucks and cars.
Under preliminary rules that took effect Wednesday, a title loan will be defined as a loan with an annual interest exceeding 36 percent that is secured by the title to a vehicle owned by the borrower.
"Basically, what this would do is, say, if you're going to give your title up to somebody, they need to tell you the rules," said Sue Hofer, an Illinois Department of Financial and Professional Regulation spokeswoman.
The new rules, which are being implemented under orders from Gov. Rod Blagojevich, would also:
Require title lenders to ensure that the borrower has not taken out a title or other short-term loan in at least 15 days.
Double the maximum size of a title loan to $4,000 from $2,000.
Require the lender to give the borrower the Department of Financial and Professional Regulation's toll-free number to call if help is needed.
Lynda Delaforgue, co-director of Illinois Citizen Action in Chicago, called the rule changes "a step in the right direction."
But Delaforgue cautioned that the rule changes do not address a major concern with title loans: the high interest rates and other fees that lenders still can charge customers.
"The real crux of the issue, which is the 300 or 400 percent" annual interest rate, "there's really nothing in the rules that's going to make an impact on the cost."
Once the rule changes have been filed with the Illinois secretary of state, the clock begins ticking on a 45-day first-notice period, enabling industry groups, advocates and members of the public to file comments or request a public hearing.
During the second-notice period, also 45 days long, the rule changes will be reviewed by the J oint Committee on Administrative Rules, a bipartisan legislative oversight committee created by the General Assembly.If the committee takes no action at the end of this 45-day notice period, the rule changes become permanent.
Source:
http://www.bnd.com/homepage/story/409473.html | 
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