Car title loan company LoanMart has faced decades of scrutiny over its lending practices. While the company claims to provide fast and trustworthy credit options, consumer complaints suggest otherwise. Allegations of predatory lending, excessive interest rates, and violations of consumer protection laws have surfaced. These allegations raise concerns about the company’s operations. While LoanMart conducts its business out of California, its lending practices are subject to scrutiny in other states where stringent lending laws are in place.
What is LoanMart?
LoanMart officially registered as Wheel Financial Group, LLC, is a California-based lender specializing in car title loans. It promotes car title loans as a more financially responsible alternative to payday loans. However, auto title loans, like payday loans, target desperate consumers with bad credit. These loans provide a quick cash infusion for ludicrously high interest rates. The company’s website boasts about its 23-year history, servicing more than 345,000 title loans since 2002. In that time, LoanMart has garnered a reputation for imposing exceptionally high interest rates. These rates tend to unfairly target individuals in desperate financial situations.
What is a Car Title Loan?
A car title loan is a short- or long-term credit option known by names like: pink slip loan, auto title loan, auto equity loan, car equity loan, auto collateral loan, or vehicle-secured cash loan. This type of loan utilizes the borrower’s vehicle as collateral. To qualify for such a loan, the borrower must fully own the car without any outstanding liens. Title loans require the consumer to offer their vehicle as collateral. Consequently, if a person falls behind on their payments, the vehicle can be repossessed. Research by the Consumer Financial Protection Bureau suggests that these loans are as risky, if not more so, than a payday loan. Specifically, 1 in 5 title loans result in repossession.
Consumer Protections for North Carolina Borrowers
North Carolina has implemented several consumer protections to prevent unfair lending practices. These rules ensure that people seeking financial help are treated fairly. They are not charged extremely high interest rates that can lead to ongoing debt. The North Carolina Consumer Finance Act sets a strict usury limit on lending.
About Usury Laws
Usury laws serve as crucial safeguards for consumers, specifically protecting them against excessively high interest rates. These laws establish maximum allowable rates for various types of loans. In North Carolina, these laws dictate different maximum interest rates based on the lender’s legal status and licensing. Unlicensed lenders who initiate car title loans in North Carolina for $25,000 or less cannot charge state residents more than 16% in interest. Lenders must register with the North Carolina Office of the Commissioner of Banks (NCCOB). Registration allows them to charge a higher rate. LoanMart is not registered with the NCCOB and is subject to this cap.
Consumer Allegations Against LoanMart
Consumer Affairs reports that LoanMart’s average interest rate varies significantly, typically between 36% and 99%. This substantial range indicates that borrowers may encounter varying rates based on personal factors, including credit history and loan terms. Additionally, numerous online consumer complaints indicate that some reported interest rates have reached as high as 300%. These alarming rates have raised consumer concerns regarding the true affordability of such loans.
What You Can Do
If you are a North Carolina resident unlawfully charged an interest rate exceeding 16% by LoanMart for a car title loan, contact us today. Our consumer protection attorneys have experience advocating for consumers charged illegal fees. We have experience recovering compensation for their damages. Possible compensation may include compensatory damages, reimbursement of the unlawful fees you paid, and attorney’s fees.
We offer free consultations, and you don’t pay unless we recover compensation on your behalf. Maginnis Howard is a North Carolina law firm representing clients from our Raleigh, Charlotte, and Fayetteville offices.
