Senate passes 'compromise' title-loan bill

ATLANTA - The Republican-controlled Senate voted Wednesday to put new restrictions on Georgia's title loan industry without a lower cap on interest rates sought by some Democrats.

"We think we've struck a good balance with this legislation,'' said Sen. Bill Hamrick, R-Carrollton, chairman of the Senate Banking and Financial Institutions Committee, after the Senate passed his bill 48-4.

Two legislative study committees began scrutinizing title loans last year after consumer complaints of abuses by companies that issue the short-term high-interest loans, usually a few hundred dollars, to people willing to give up their car titles as collateral for quick cash.

Hamrick's bill, which now goes to the House, places title lenders under the oversight of the Governor's Office of Consumer Affairs, which would be charged with collecting data on the industry, including the number of cars that are repossessed each year when customers fail to pay back the loans on time.

The legislation also requires lenders to give customers written notice before repossessing their cars and gives them 20 days to pay and get their vehicles back before they can be sold.

Any money that lenders recover from selling repossessed cars above what the customer owes would have to be refunded.

But senators balked at an attempt by Sen. Emanuel Jones to roll back maximum interest rates lenders are allowed to charge.

Jones, D-Decatur, proposed an amendment limiting the annual interest to 60 percent on loans extended beyond three months.

As written, the bill would allow lenders to charge 150 percent annually beyond the first three months of a loan, down from a 300-percent cap that applies during the first 90 days.

"These title loans are meant to be short term,'' Jones said. "But too often, borrowers are stuck for a year or more with triple-digit interest rates.''

But other Democrats argued that rolling back interest rates for such high-risk loans would threaten the existence of an industry that cash-strapped, credit-poor Georgians have come to rely upon.

"There is a market for people who can't borrow any place else,'' said Sen. Steve Thompson, D-Powder Springs. "And we don't want that to go away.''

Sen. Steen Miles, D-Decatur, introduced a bill last year capping annual interest on title loans at 60 percent. But she said she worked with Hamrick to pass his bill when it was clear that she couldn't get enough support for her alternative.

"Sometimes, you have to compromise,'' she said.