The Debt Trap: Inside Virginia's Car-Title Loan Industry

You may have heard their jingles on the radio or driven by one of the many storefront operations that cluster around military bases or lower-income neighborhoods. They are car-title lenders, offering easy money for those willing to hand over the title to their automobiles. WAMU 88.5's Michael Pope examines the industry's strength in Virginia, what it means for borrowers and why some activists are looking to rein in such businesses. Some key findings:

  • The number of cars being repossessed has doubled in the last three years, and that's just the ones regulators are tracking.
  • The number of borrowers failing to make monthly payments has tripled in the last three years, and that's just the ones regulators are tracking.
  • Although car-title loans are capped at 264 percent interest and limited to a year, about a quarter of the money loaned by the industry evades those regulations and comes with no limits on the interest rate or duration of the loan.

Explore the series:

The Fast-Cash World of Virginia Car-Title Lenders

Part 1: No job? No credit? No problem — particularly in Virginia. The commonwealth is one of 21 states where businesses can offer high-interest loans to those willing to hand over the title to their cars. That means residents from D.C. and Maryland flock to Northern Virginia — lured by the promise of quick cash. But many fall into a debt trap.

How Virginia Became The Region's Hub For High-Interest Loans

Part 2: After creating and then stifling Virginia's payday lending industry, state lawmakers opened the door to car-title lending in 2010. Since then, these businesses have stayed a step ahead of efforts to limit how much interest they charge.

For Military Personnel, Lenders Aren't Far Away

Part 3: Military communities across the country are enticing targets for high-interest lenders, but the story plays out with particular intensity in Virginia, which has a wealth of military installations, a regulatory environment that's relatively friendly to high-interest lenders and a geographical advantage, too.

As Repossessions Pile Up, Critics Call For Change

Part 4: When a car is an economically vulnerable person's connection to work, school or childcare, a repossession is especially tough. So some local, state and federal officials are trying to limit consumers' exposure to loans that are more likely to end up with a vehicle being taken away.


Virginia's High-Interest Lenders

Explore the map to see where lenders offer car-title and consumer finance loans in Virginia. Each census tract is labeled for the percentage of its population that was below the poverty line as of 2013. Per 2013 U.S. Census guidelines, poverty is defined as annual income below $23,550 for a family of four or $11,490 for an individual under the age of 65.

Source: Poverty statistics: U.S. Census Bureau, 2009-2013 5-Year American Community Survey; Lending providers: State Corporation Commission, Commonwealth of Virginia; Military Installation information from ArcGIS.

Map by Chris Baronavski, WAMU