Many consumers breathe a sigh of relief when their car loans are finally paid off. Gaining title to personal vehicles should free up monthly monies—unless that title is later used as collateral for a high-cost and abusive loan.

Car-title loans provide a percentage of a vehicle’s total value in exchange for the promise of quick cash. Unfortunately, when car titles are used as collateral for one of the most predatory and high-cost consumer loans, another cycle of debt can begin. The typical car-title loan is refinanced eight times and comes with triple-digit interest rates as high as 300 percent. Each year, car-title loans strip $4 billion in fees from consumers. The looming threat of repossession, which affects one in five consumers, often prompts these costly renewals.

Frequently industry collection practices violate basic consumer laws. Vehicle repossessions cause not only the loss of personal transportation, but create mobility challenges affecting virtually every dimension of life—reaching employment, education, medical services or managing personal business.

In recent days, the Consumer Financial Protection Bureau (CFPB) fined a major car-title lender $9 million and sued another five. Together, these separate actions underscore how consumers’ rights are often violated and the continued need for financial regulation.

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