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101 Va. L. Rev. 1753 (2015)
Taming Title Loans

handle is hein.journals/valr101 and id is 1779 raw text is: NOTE TAMING TITLE LOANS Ryan Baasch* INTRODUCTION F OR the poor, credit is hard to come by, and cash nearly impossible. With little or nothing to secure a loan, it is easy to see why. An indi- vidual living hand-to-mouth has few possessions she can part with, even temporarily. Take a car for instance. Someone in need of quick cash is in no position to surrender what is likely her only mode of transportation, even if it is only as short-term collateral. But such borrowers are not completely out of luck. Enter title loans: With these transactions, the borrower does not physically surrender her car, and yet she may obtain a four-figure loan. Meanwhile, the lender is secured in the event of de- fault. It is this phenomenon that has made title lending so attractive for underprivileged consumers and so lucrative for fringe-market lenders. To understand this apparent paradox and the consequences it can spawn, consider the following hypothetical based on a congressional an- ecdote.' You are like one of millions of Americans living paycheck-to- paycheck, and your rent is due in two days. Though usually responsible with your rent, some unexpected medical bills have made timely pay- ment impossible this month. You do not have a credit card, and your landlord will not accept such a payment method anyway. You also do not have much in the way of collateral for a loan. You do, however, have a car. But, of course, you consider it essential. Without it, your ability to work is jeopardized. To your surprise, you find a lender willing to permit you to keep possession of your car while loaning you the $1,000 or so you need to make rent. The lender's condition is simply * Law Clerk to the Honorable Karen Lecraft Henderson, 2015-2016. J.D. 2015, University of Virginia School of Law. I would like to thank Professor Saikrishna Prakash for invaluable mentorship throughout my time at the University of Virginia. I would also thank Professors Jason Johnston and Richard Hynes for both inspiring my interest in this topic and providing useful feedback. Finally, I would like to thank Trevor Lovell for being a valued sounding board. All mistakes and omissions are my own. 'See 146 Cong. Rec. 12,523 (2000) (statement of Rep. Shaw) (recounting the story of a title loan consumer in Florida). 1753

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