Throughout the session, legislators have worked to cap interest on car title loans as a way to help prevent people from falling into uncontrollable debt.  House Bill 2245 would cap interest on the loans at 36 percent annually and allow borrowers to renew a loan only twice.  The bill also focuses on consumer education, requiring borrowers to receive more information about their loans and the danger of attempting to use them as a long-term solution to debt.

Opponents of the bill believe the legislation is not needed.  They contend that short-term loans are not "predatory loans" and instead offer people more options in times of financial hardship.  In addition, requirements to educate borrowers about the risks and possible consequences associated with title loans is already a part of the process.  Fees tied to title loans are intended to fund administrative costs, not to take advantage of borrowers. 

Proponents of the bill argue that borrowers frequently end up making "upside down payments," meaning they pay more in fees than they originally borrowed, plus the amount of the original loan.  This seriously hinders the same population title loans suggest that they are in business to help.

This is an important piece of legislation that deserves full consideration by the House of Representatives.  Unfortunately, the bill was blocked from moving out of committee.  The issue will now have to wait another year before it can be reviewed again.