Car Loan Company Brought Down By PA Atty General Over Illegal Interest Rates
HARRISBURG – Attorney General Michelle Henry today announced a settlement with a Delaware-based title loan company that levied illegal interest rates — with some borrowers paying more than 200% in annual interest.
As a result of the OAG’s recent settlement, Auto Equity Loans of DE, LLC (“AEL”) will refund $705,000 in unlawful interest charges to consumers who fell victim to the scheme. In addition, the settlement requires AEL to cancel and stop accepting payments on all remaining car title loans to Pennsylvanians – worth more than $1 million in debt cancellation.
AEL no longer operates as a car title loan business.
This settlement comes on the heels of earlier settlements with car title lenders Dominion Management of Delaware, which operated as CashPoint, and Approved Financial. Between the three cases, the Office of Attorney General has obtained more than $2.2 million in consumer restitution and more than $4.3 million in debt cancellation for Pennsylvanians who were ripped off by out-of-state car title lenders.
“Auto Equity Loans was a predatory lender preying on Pennsylvanians, thinking they could avoid Pennsylvania law because they were based in Delaware,” Attorney General Henry said. “We do not care where you are located; if you exploit Pennsylvania consumers, you will hear from us. This settlement will make whole the victims of AEL’s scam and puts other wrongdoers on notice.”
Title loans are high-cost installment loans that require the borrower to pledge a vehicle title as collateral. Since title loans are extremely expensive, consumers typically turn to title lenders when they are at their most vulnerable — such as after losing a job or facing major medical expenses. Under Pennsylvania usury and racketeering laws, title loans are effectively prohibited because title lenders generally charge interest rates far above the Commonwealth’s 27 percent annual interest limit.
As part of today’s settlement, AEL and its successors, agents, owners, employees, and officers are prohibited from ever again making vehicle title loans to Pennsylvania residents.
The settlement follows several years of litigation against AEL stemming from the company’s ultimately futile attempts to stall the investigation.
Consumers who believe they have been taken advantage of by similar practices at another car title lender should file a complaint online or contact the Office of Attorney General at sc***@at*************.gov or 1-800-441-2555.
The AEL settlement was filed in the Philadelphia Court of Common Pleas by Assistant Director for Consumer Financial Protection Nicholas Smyth.