How New Ohio Laws Impact You When You Take Out Columbus Car Title Loans?

Ohio became one of many states to pass laws against payday loans in 2010. These restrictive laws were designed to protect consumers, as many advocacy groups claimed these high-cost loans exploit the poor and vulnerable in the community. Lawmakers in the state also claim that Columbus car title loans are simply operating in a loophole in the 2010 lending laws, loaning cash to people under nearly identical terms.

The new laws placed strict rules on lenders, capping interest at 28% APR and requiring a minimum payback term of 31 days. That means any lender who provides payday loans or car title loans in Columbus must give you at least a full month to pay back your loan, not just two weeks. Lenders are able to use other laws that still exist to charge an effective APR of over 350%. Keep in mind this is an effective rate, not the actual rate, as it assumes the loan would last for 12 months, not one.

While you may see many similarities between payday loans and car title loans, Columbus lenders who provide title loans do have a few differences. The most noticeable difference is title loans use your vehicle's title as security, not a paycheck. This means you face possible repossession if you aren't able to repay your loan.

All of this definitely makes it easy to vilify Columbus car title loans and lenders, but it's also true that these loans do provide a very valuable service. Consider the thousands of Ohio residents who have no savings or access to available credit, as well as those with bad credit who can't turn to a bank for a loan. What else can these people do when they need to buy food, pay the rent, get their car fixed or deal with some other emergency?

If they are used responsibly, car title loans in Columbus can even help many people save money. Someone who has written checks to pay bills, but then discovers they don't have the cash in their account, will be looking at bounced check fees of over $30 per check from their bank. A title loan of $500 can cover these checks, and the total cost for the loan may be significantly less than the total fees the bank would charge. Consumers can also use title loans to avoid late fees on credit cards, mortgages, utilities, student loans and more.

It's true that there are serious consequences to defaulting on Columbus title loans, but this does not mean the service itself is bad. Borrowers should use caution and only borrow what they need and can afford to repay to take advantage of this source of emergency money and avoid avoid repossession and a cycle of debt.