A car securities lending company operating in Massachusetts without a license is facing huge losses, while its Bay State customers will not have to repay their loans.
A state court has issued a permanent injunction v Liquidation LLC at the behest of Massachusetts Attorney General Maura Healey. As a result of the court order, the business is banned from operating in Massachusetts and the 200 consumers who have taken out the loans do not have to pay them back.
Sending a message
Consumers whose vehicles were repossessed because they could not repay their loans will get their cars back. The privileges placed on vehicle titles were dissolved and new titles were issued to affected consumers. Healey says the decision should send a message.
“With this judgment, Massachusetts borrowers will be freed from paying the illegal loans made by this shell company,” she said. “This unlicensed auto title lender is prohibited from doing business in Massachusetts again. “
Car title loans are similar to payday loans except that instead of being secured by a paycheck, the loan is secured by a car title. But both are short-term loans that consumers often struggle to repay on time. If a consumer doesn’t have $ 300 for an emergency repair and needs to borrow the money, chances are they won’t have the money to pay off the loan two weeks later.
Auto title loans generally have a longer term, but often have to be paid off in full after a year. Healey’s lawsuit indicting liquidation did not notify borrowers of the extent of final payments when the loan was due.
20% lose their vehicle
While payday loan customers are often trapped in a cycle of debt, taking out loan after loan to pay off the previous loan, many auto title loan customers end up losing their vehicles. In reality, research compiled by the Center for Responsible Lending earlier this year, one in five consumers who take out a car loan end up losing their vehicle.
Healey says several vehicles that Liquidation has taken over are now in auction houses awaiting sale. But the court ordered their removal and return to their owners. In addition, the company must pay $ 197,600 in restitution and $ 1,135,000 in civil penalties.
Healey filed a complaint over a year ago after an investigation found Liquidation was granting loans ranging from $ 700 to over $ 9,000, with interest rates ranging from 181% to 619%, in violation of state law.