Car Repossessed On an Auto Title Loan? Read This!

Have you ever been tempted by a short-term loan with no credit check “and you get to keep your car”? Don't get sucked in by an illegal auto title loan. Michigan is fighting back against them and you can help!

Auto title loan ads promise all you have to do is fill out a form, hand over your title, and you get your money. But for people most in need, illegally high interest rates on these short-term loans make keeping their cars nearly impossible.

Here's how the loans work. You fill out an application and give the lender your title. Sometimes, the lender will install a GPS device in your car. Then you get cash. You have 6 to 12 months to pay the lender back, but you are charged an average of 25% interest per month on that amount.

When the loan period runs out, the whole balance, including fees, comes due at once in a “balloon payment.” Often that one payment is bigger than the original loan. If you don't have the money, the lender keeps your title and gets your car repossessed.

Michigan law doesn't allow lenders to take advantage of consumers that way. It limits loan interest to 7% per year unless a company obtains a special license as a pawn broker or auto title lender. Even those amounts are capped at 25% to 36% per year.

That's why Michigan Attorney General Bill Schuette is suing Liquidation, LLC, the company behind many of these auto title loan offers, to shut them down. Cease and desist letters also went out to over 1,000 Michigan businesses who helped Liquidation, LLC, repossess vehicles.

“This company’s business model appears designed to take advantage of financially vulnerable consumers with damaged credit histories,” said Schuette.  “For many of these consumers, their vehicle is likely their largest asset and only means of transportation, making these illegal loans devastating to their pocket books and even to their ability to go to work.”

You can help fight back against illegal auto title loans. If you had a loan through Liquidation, LLC or any of the companies connected to it, you can file a complaint with the Attorney General's office. The company works under the names:

• Vehicle Liquidation, LLC
• Autoloans, LLC
• Auto Loans, LLC
• Car Loan, LLC
• Sovereign Lending Solutions, LLC
• Sovereign Lending, LLC
• Management Solutions, LLC
• Loan Servicing Solutions, LLC

By filing a complaint, you could be included in the Attorney General's lawsuit and get some of your money back. You will also help protect your neighbors from illegal lending and, maybe, save their car.

Dani K. Liblang is a consumer protection attorney at The Liblang Law Firm, PLLC. She fights for consumers against abusive lenders and collections companies. If your car has been repossessed by an auto title loan company, contact The Liblang Law Firm, PLLC, for a free consultation.