|TitleMax opened on Little River Turnpike, Annandale, March 21.|
If you’re in need of instant cash at exorbitant rates and willing to risk losing your car, you’ve got plenty of options in Annandale, including a brand new TitleMax store at 7409 Little River Turnpike.
TitleMax provides loans of up to $5,000. Interest rates range from 9.99 percent to 12.99 percent, with the lowest rates for the largest loans, said Tim Brown, general manager of the Annandale store. According to Brown, Title Max offers “the best rates in the industry.”
Don’t be fooled by the rates quoted, though. A 9.99 interest rate on a $5,000 loan translates to an annual percentage rate (APR) of 284 percent. That means a borrower would owe more than $800 in interest charges if the loan is paid off in six months and over $1,400 in 12 months.
|Fast Auto Loans on Little River Turnpike, Annandale.|
Anyone can get a loan from TitleMax, regardless of credit history, as long as you have the title to your car. A company representative conducts an appraisal, evaluating the vehicle’s overall condition and mileage, before letting you know the amount you can borrow, Brown said. Loans must be repaid within a year. If borrowers can’t make the payments, he said, TitleMax takes ownership of the car.
TMX Finance, the company that operates TitleMax, is expanding throughout Northern Virginia, Brown says. There are nine stores in Fairfax County, including branches that opened with the past few months in Burke, Bailey’s Crossroads, Tysons, and Seven Corners.
“The team at our new TitleMax location is excited and ready to help the residents of Annandale, VA, obtain the short-term cash loans they need,” said Otto Bielss, senior vice president of operations for TMX Finance. “We look forward to being a part of the local community and encourage those who may need our services to contact our new branch.”
The new TitleMax is just a few steps away from Fast Auto Loans, at 7345 Little River Turnpike. There are also two LoanMax locations in Annandale—at 7221 Little River Turnpike and 7109 Columbia Pike—and four others in Fairfax County.
Both Fast Auto Loans and LoanMax offer loans up to $10,000. LoanMax doesn’t publish interest rates online, but Fast Auto Loans reports that an annual percentage rate (APR) of a typical loan of $1,000 is 246.35 percent.
Title loans are geared to people with an immediate need for cash—to pay for medical bills, a business crisis, funeral, or other emergency—and have a bad credit history so they can’t get a credit card or bank loan. Borrowers must own a car free and clear. Judging by the online complaints about these loans on various websites, many borrowers fail to fully understand the true cost of these loans when they sign a contract.
A report on car title loans, Driven to Disaster, published in February by the Center for Responsible Lending, finds the APR on title loans “especially excessive considering the value of the collateral and the relatively low amount of the loan.”
The report says the typical loan nationwide is $951 with an APR of 300 percent, with the full payment due in one month. The report quotes the TitleMax president as saying “customer loans are typically renewed at the end of each month and thereby generate significant additional interest payments.” A consumer who borrows $951 and renews the loan eight times would on average pay $2,142 in interest (or $3,093 in interest and principal), the report says. Even worse, one out of every six loans incurred a repossession fee—typically $350 to $400—which is added to the borrower’s running balance.
Car title loans are legal in 21 states. The Virginia General Assembly, however, passed legislation in 2011 making it easier for car title lenders to do business in the state. Del. Scott Surovell, a Democrat whose district includes the Route 1 corridor, a hotbed of car title and payday lenders, introduced legislation in the most recent session to restrict these lenders. The bill didn’t get anywhere, though, due to pressure from industry lobbyists.