Consumer Financial Protection Bureau

New CFPB Research Confirms Car Title Loans, Like Payday Loans, Cause Financial Hardship

One In Five Car Title Loan Borrowers End Up Losing Their Car

Washington D.C.—Today, the Consumer Financial Protection Bureau released a new report illustrating the harm caused by car title loans.  Car title loans are a high-cost loan similar to a payday loan that is secured by a car title instead of, or sometimes in addition to, direct access to a consumer’s bank account.  The report found that single payment car title loans are frequently rolled over resulting in a long-term cycle of debt and one out of every five borrowers loses their car.

In March 2015, the CFPB released a proposal to prevent harmful practices associated with car title and payday loans.  A proposed rule, the next step in the rulemaking process is expected to be released shortly.

“The CFPB’s proposed rule, scheduled to be released in the coming weeks, is the best chance consumers have at avoiding further harm caused by car title loans and other abusive debt products like payday and car title loans,” said Tom Feltner, Director of Financial Services at Consumer Federation of America.  “Getting this rule right means requiring lenders to fully consider a borrower’s income and expenses and make a fair determination that, at the end of the month, there is enough money left to pay living expenses and loan payments without hardship or deferring loan payments.”

The CFPB car title report found that:

  • One out of every five borrowers that take out a car title loan have their car repossessed.
  • Four out of every five loans result in re-borrowing the same day the previous loan is paid off and only 12 percent of car title loans are paid off on the original terms.
  • Half of car title loan borrowers take out four or more loans.
  • Repeat lending is the business model of car title lenders – borrowers stuck in a debt trap for seven months or more represent more than two-thirds of the total car title loan business.

“These findings demonstrate the strong need for a CFPB payday and car title rule that protects consumer regardless of how the lender secures or collects a loan or how long the borrower has to repay,” said Feltner.  “A loan secured by a car title that results in one out of every five borrowers losing their car is a debt trap plain and simple.”

For additional information on car title lending, please see “Driven to Disaster: Car-Title Lending and Its Impact on Consumers” a joint report by Consumer Federation of America and the Center for Responsible Lending.

Contact: Tom Feltner, 202-618-0310


The Consumer Federation of America is an association of more than 250 nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education.