MAX LOAN RULES 3 OUT-OF-COURT COMBINATIONS
The plaintiffs alleged that the car title lender failed to adequately disclose certain terms of the financing.
Three lawsuits by Virginia plaintiffs against car title lender Loan Max will not go to trial – they were settled in secret.
The borrowers alleged that Loan Max violated federal and state lending laws by failing to adequately disclose loan terms, among other offenses.
Consumer advocates were monitoring the cases, which – had they been tried – could have set legal precedents that could have changed the way lenders do business in Virginia.
Carrie Cantrell, a spokesperson for the company, did not comment on the settlements. She previously said Loan Max complies with state and federal laws.
The Georgia-based company would be better off settling with the few clients who are struggling to sue, rather than risking a precedent-setting court decision that is not favorable to the company, Jay Speer said, attorney at the Virginia Poverty Law Center. in Richmond.
“If they went to trial, the car title lenders would be in big trouble,” Speer said. “It makes financial sense to give in.”
The lenders offer high rate, high interest rate loans known as motor vehicle equity loans – auto title loans – in exchange for possession of the auto title deed from the lender. ‘borrower. The automobile must be fully repaid and owned by the borrower. If the borrower defaults, the lender can take the borrower’s car and sell it.
Because car title lenders are unregulated in Virginia, no one knows how many there are in the state. An online phone book recently listed 26 Loan Max locations statewide. Fast Auto & Payday Loans, with two locations listed in Newport News and two in Hampton, had 16 locations in Hampton Roads and 39 statewide.
The lenders said they were operating here under the same law that allowed credit card companies to offer revolving credit for any interest rate agreed to by the borrower and the lender.
Plaintiffs Janet Ruiz of Harrisonburg and Amilita Opie of Buckingham were charged 30% interest per month, or 360% per annum. Sandra Young of Richmond signed a contract with Loan Max, claiming she would pay an annual rate of 9850% during the first payment period, according to her lawsuit.
All three lawsuits said the one-time 25% fee – $ 200 for Opie, $ 737.50 for Ruiz, $ 275 for Young – violated federal law because it was only disclosed in the small print, without explaining why. amount or purpose.
The lawsuits also alleged that Loan Max could not claim to be legitimized by state laws that govern revolving credit – an open line of credit such as that offered by credit card companies.
Firms are required by law to offer a 25-day grace period before applying finance charges.
Ruiz borrowed $ 2,950 from Loan Max in February 2005. By April 2006, his debt had grown to $ 16,000.
Opie ceded the title to his 1993 Ford Explorer in exchange for an $ 800 loan in June 2005.
In September, she could not pay her debt of $ 1,463 and Loan Max repossessed her car and sold it. She still owed Loan Max $ 413.
Young repaid more than $ 2,700 after borrowing $ 1,100, according to his lawsuit.
Grant Penrod, Ruiz’s attorney, said he and his client were bound by confidentiality agreements to say what was in the settlement. He also said the terms of the deal were acceptable to Loan Max and Ruiz.
Opie’s lawyers could not be reached.
Young’s attorney, Dale Pittman of Petersburg, said he and his client were also required by their settlement – which has not been finalized – to keep the terms secret.
“Securities lending is a horrible, horrible industry,” he said. *