An online car title lender that charged outrageous interest rates and took consumers’ cars with little or no warning is now banned from making loans in North Carolina according to Attorney General Roy Cooper.
Cooper filed suit late last month against the lender, which does business as Autoloans, Car Loan, Sovereign Lending Solutions and Title Loan America, for charging North Carolina consumers average interest rates of 257 percent on loans of $1,000 to $2,500. Title loans are small dollar loans secured by consumers’ car titles. State law caps interest rates on such loans at 30 percent for licensed lenders and at 16 percent for unlicensed lenders, such as the defendants.
Under an order signed by Wake County Superior Court Judge Donald W. Stephens, while the lawsuit is underway the company and its owners are barred from: making or collecting on loans in North Carolina; repossessing, selling or placing liens on any car owned by a North Carolina consumer; destroying records; and spending or transferring any money. Cooper is seeking a permanent ban on the defendants’ illegal lending business, cancellation of previous loans and liens, and refunds for North Carolina consumers.
According to the Attorney General’s investigation, the title lender has operated since 2012 under various names and appears to be based in Florida.
As alleged in the complaint filed with the court, at least 700 North Carolina consumers took out title loans from the defendants. In addition to charging annual interest rates of 161 percent to 575 percent, most of the loans included payments on interest only for the first 11 months and a final balloon payment larger than the original loan amount.
The lawsuit contends that when consumers couldn’t make the onerous payments, the defendants repossessed their cars illegally. The lender sent borrowers a GPS tracker to install on their cars and placed a lien on their car titles. If a consumer paid late or missed a payment, the defendants used the GPS tracker to find and repossess the consumer’s car.
The Attorney General’s Office has mailed letters to consumers who took out loans from the defendants to make them aware that the defendants cannot collect payments or repossess cars under the current court order. The office has also written towing companies and automobile auction houses that have previously done business with the defendants to notify them about the court’s order.
A total of eight consumers have complained to the Attorney General’s Consumer Protection Division about the defendants’ unfair loans to date. To file a consumer complaint, call 1-877-5-NO-SCAM toll-free within state or use the online complaint form at ncdoj.gov.