300% Interest Rates In Michigan
A bill has been scheduled for a vote in Michigan's Senate which would let lenders loan Michigan car owners money against their vehicle at annual interest rates as high as 300%.
Currently these auto-title loans are not legal in Michigan and if passed the state's 1917 Pawnbrokers Act would have to be changed. Apparently there is an identical bill in Michigan's House..
How does the interest rate get up to 300%? The bill would allow these companies to charge a 20% monthly "usage fee."
Currently the law in Michigan allows pawnshop interest rates at 3% a month, for example if someone was to borrow $500 for a year their interest cost would be $180. Under this new bill, pawnbrokers could add a 2% monthly usage fee when loaning money against vehicles. That would result in a 12-month, $500 auto title loan would cost the borrower $1,380 in interest.
What are your thoughts about this?
Should we have a law to protect people against getting themselves in trouble financially by paying such outrageous interest rates?
Call me today on the Live with Renk show, Monday through Friday 9 a.m. to noon, to let me know your thoughts at 269-441-9595.