As commercial real estate brokers, we have received a surplus of calls in the past six months from "car title" lenders looking to set up shop in our market. After the first two opened for business, we thought, "well, that's kind of interesting." After the next three calls from other similar lenders, we thought, "WTF?"
Matt Yglesias just posted about the "changing shape of American debt." Apparently new rules and regulations out of Washington are causing credit card debt to shrink and "subprime auto lending" to increase. If you follow the link above, you can read his whole post.
Here is the part I believe:
"....part of the story is that the lender has more recourse if you default on a car loan (it can take your car) than if you default on a credit card bill"
Here is the part I don't:
"...the wide dispersal of car dealerships across almost every congressional district in America means that the car dealership lobby is actually stronger than the Wall Street lobby"
Just as an aside and filed under the heading "Just Thought You'd Be Interested," we've seen several lease terms proposals from these car title loan companies. They all contain the same language that allows them to terminate their lease if the State passes a law, or regulation, that makes their business model non-functional. Hmmm.
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