Lending War! South Carolina Title Loan Lenders Sued by North Carolina

Did you know that South Carolina Lender got sued by North Carolina residents?

 It’s a wild story. 

Have you heard about the predatory title loan lenders in South Carolina? You likely have — and you were probably pretty scared by what you heard. But don’t worry, North Carolina borrowers took action against them.

Let’s take a look to see what they did and how it went!

The truth about the Carolina title loan civil war

Sadly, several South Carolina title loan lenders have been preying on low-income earners in North Carolina. Why? Simply to negate the target state’s protection laws. To put it bluntly, this is diabolical.

These lending companies are currently facing numerous lawsuits in North Carolina for placing their shops along the border—which both sides dispute where the actual line should be.

Timeline

Description automatically generated

Essentially, these dodgy merchants have been tempting people over the state line and encouraging them to sign title loan contracts.

Now, you might be asking yourself this — what are title loans? We’ll take a look at this before we carry on.

What are title loans?

Similar to payday loans, title loans tend to be small-dollar loans that run for a short repayment period. However, unlike payday financial aids, you have to use your vehicle (car, van, motorcycle, moped, truck, etc.) as collateral. This is all fine when done correctly, and it can even get someone out of a financial jam.

But…here is the kicker.

When they are unregulated, these little loans can have interest rates up to 300%. Of course, this is annually, but still, the rates can be uncapped and terrifyingly high. You get the gist.

Anyway, back to the lending war

Over the past few years, so many people living in North Carolina (too many to count) signed up for these title loans at the border. It didn’t go well for them, sadly.

Currently, hundreds of these aforementioned people are suing the title loan lenders in both federal and state court. Who are they represented by, you ask? The Greensboro Law Center.

The main question, however, is why are they suing them.

The reasons behind all of them are the same. They state that the law in North Carolina stops title loans from being taken out. Those standing against the lending companies are trying to get money for the illegal repossession of their vehicles because of the loan agreement and for the disgustingly high interest rates they were charged.

Surprisingly, all the litigations are against South Carolina’s biggest lending companies. Among them are AutoMoney Incorporated and TitleMax (the bigwig of them all).

For those who live inside South Carolina’s borders, you have probably driven past these stores before or have applied online using Titlelo. They tend to be eye-catching, tempting, and outlandish. Not to mention the copious number of “Fast Cash Now” and “No Title Needed” signs that litter the windows and billboards in every state county.

The issue is that these title loan lending companies are indeed legal inside South Carolina lines. The laws in this state do next to nothing to stop its residents from being trapped in the ever-scary debt cycle. But, things are different in North Carolina. In this state, the government has enacted several laws that protect everyone from insane interest rates and uncapped personal loans. Hence why the lenders are getting sued.

What impact will these litigations have?

Now you know the story…But we still haven’t covered the aftereffects because clearly, something will change. The question is, for which state? Let’s have a gander at the possibilities, shall we?

South Carolina will likely see a change in the consumer lending industry (which, in our humble opinion, is a fantastic thing). This sector sold over $2 billion in these pesky title loans over 12 months. Yep. Just 12 months. Everyone is hoping that these litigations are going to change the way the state’s government views the debt cycle and the lack of moral compass behind these lenders.

Alongside this, all of the court cases have shed light on just how hard it is to regulate the consumer lenders since each state has its own laws. Predatory lending should have strict regulations placed on them no matter where you go in the United States of America. But, as it stands, this hasn’t been put into effect.

The lending war has also highlighted the fact that those working in the industry are constantly looking for loopholes to access those in states where it’s illegal. This is a real shame — especially for all those reputable lenders out there who are trying to do the right thing and be of service to those in need.

Unfortunately, we can’t say for sure how many of the South Carolina title loan lending companies have sold to residents of North Carolina. However, there are some common factors that those involved have listed. These include:

  • All of the sued businesses have storefronts along the border between North Carolina and South Carolina.
  • All of them tend to run along the highway.
  • The majority of them have stated that they have done business with residents of North Carolina.
  • All of them have tried to defend their case by saying that they don’t have a physical store in North Carolina so the state’s laws don’t apply to them.
  • All of them claim that their customers were fully aware of the risks and terms of the loans.

Our advice? Be careful about where you get your loan from. Always take the time to research your state’s laws and find a reputable provider.

Adam Hansen