Payday, Title and Pawn Shop Loans in Georgia: Subprime Report
With an above average poverty rate of nearly 18% and a below average median household income of only $51,037, it can be difficult for many Georgia residents to make ends meet. That’s why some of them might look toward bad credit loans, like payday loans and title loans, for short-term financial relief. However, with laws in Georgia preventing payday loans and a strict enforcement of laws against title loans, residents are guided toward better short-term loan options that can prevent an endless cycle of debt.
Payday Loans in Georgia
Georgia is one of 18 states that does not allow payday lending. This means that there are no legal payday lenders in Georgia. Let’s repeat that—there are NO payday lenders in Georgia! That’s great news for residents!
The History of Payday Lending in Georgia
The Georgia Industrial Loan Act of 1955 essentially made payday lending illegal by requiring state licensing and registration and imposing strict usury limits on small loans. In 2004, the Georgia General Assembly increased the fines and criminal penalties for people making small loans at usurious rates of interest.
The Georgia Payday Lending Act went into effect in May of 2004 and authorizes fines for every violation of the law as well as misdemeanor charges for those who violate it. Because of Georgia’s stance on payday lending, any lender acting in violation of the law by charging more than 10% interest on loans under $3,000 can face a fine of $5,000 per violation.
After the Georgia statute was passed in 2004, several payday lenders and their out-of-state bank “partners” sued the state, seeking a declaration that the Georgia Payday Lending Act was unconstitutional. Those lenders and their “partners” failed in their attempts to change the law.
The Georgia Payday Lending Act is a prime example of proactive state legislation against abusive lending practices and has survived numerous challenges in federal court. Georgia lawmakers deserve a round of applause for protecting their constituents against predatory payday lending.
Licensed lenders in Georgia cannot charge more than 10% interest on a loan of $3,000 or less.
Georgia Payday Loan Rules and Regulations
Georgia has its own unique sets of rules and regulations to protect its residents from predatory payday lending. Under the state’s usury laws, a licensed lender cannot charge more than 10% interest on a loan of $3,000 or less. Like all state usury laws, Georgia’s interest cap also affect loans offered by out-of-state lenders.
As mentioned before, the Georgia Payday Lending Act authorizes the use of misdemeanor charges against violators of the law to further protect consumers. These charges and fines were enacted to discourage payday lenders in Georgia from even trying to overcharge consumers. It looks like that in Georgia, it’s the payday lenders who have to act carefully, instead of the payday customers—a true victory for consumers.
Final Notes on Payday Loans in Georgia
Payday loans in Georgia are prohibited. In fact, there is an outright ban on payday lenders in the state of Georgia per the Industrial Loan Act and the enforcement measures provided by the 2004 Georgia Payday Lending Act. Georgia has accomplished what many states strive to do—limit the reach of payday lenders. Through strict rules and regulations, run-of-the-mill payday lenders can’t trap Georgia consumers in an endless cycle of debt.
Title Loans in Georgia
Unlike payday loans, title loans in Georgia are legal—but they, too, are capped. In Georgia, title loans are classified and regulated as “pawn loans” under Section 44-12-130 of the Georgia Code. There are currently 375 car title lenders in Georgia, which means one store for every 19,190 people.
In 2016, Georgia title loan fees totaled $199.5 million, placing them 10th in the nation. Texas holds the top position, with $431.1 million in fees.
The History of Title Loans in Georgia
Title loans in Georgia are classified and regulated as “pawn loans.” Under Georgia law, municipalities have the authority to assert the following regulatory oversight: license pawnbrokers, define their powers and privileges by ordinance, impose taxes upon them, revoke their licenses, and exercise general supervision to ensure fair dealing between pawnbrokers and their customers.
Under Section 44-12-130, a pawnbroker operating under Georgia law is defined as any person engaged in all or part of a business that lends money secured by consumers who provide goods as collateral. It also covers businesses that purchase tangible personal property on the condition that it may be redeemed or repurchased by the seller for a fixed price within a set period—in plain English, this often includes the title to your vehicle.
Georgia Title Loan Restrictions
In Georgia, title loans are limited to a term of 30 days, but the loan can be extended beyond that. Interest is capped at 25% a month for the first 3 months of the loan. After the first 3 months, the interest rate moves to 12.5% a month. With 3 months at 25% interest and 9 months at 12.5% interest, the combined maximum yearly interest rate on title loans in Georgia is 187.5%.
For title loans in Georgia, state law requires the pawnbroker to provide you with the following statement when you decide to pawn your vehicle:
“Failure to make your payment as described in this document can result in the loss of your motor vehicle. The pawnbroker can also charge you certain fees if he or she actually repossesses the vehicle.”
If you do fail to make your payments on a title loan in Georgia, the lender can charge you up to $250 to repossess your car and $5 a day to store it. On top of those fees, Georgia title lenders can also add on a handling fee. Even worse, these loans are often made for only 24% of the vehicle’s full value, and title lenders are allowed to keep any additional profit they make from the sale of a repossessed car.
If your car is worth $5,000 and you take out a $500 loan, but default on it, the pawnbroker can repossess your car and sell it. The lender will take the remaining amount due on your balance and pocket the remaining amount from the sale of your car.
At the point when your car has been repossessed, Georgia law mandates that you have a 30-day grace period before your car is sold. However, by the time you scrounge up some money, expect to owe an additional amount for repossession, storage, and handling. Title lenders know how to game the system to find excessive and ethically questionable ways to take money from those who need it the most.
Final Notes on Title Loans in Georgia
Under Georgia law, licensed pawnbrokers are limited in the amount of interest they can charge. However, these title and pawn lenders find a way to make the interest rate of 25% add up by betting on consumers to default, making title loans in Georgia a bad deal for consumers. On top of the capped interest rate, lenders can tack on various fees for repossessing your car while keeping the profits. Think twice before you decide to take out a title loan in Georgia.
Regulating Payday and Title Loans in Georgia
Since payday loans are prohibited in Georgia, the Georgia Department of Banking and Finance does not handle complaints about payday lenders. However, if you live in Georgia and are the victim of a payday or title loan, please contact your County District Attorney and notify the Office of the Commissioner of Insurance, Industrial Loan Division.
How to Report a Lender in Georgia
If you have questions about an industrial licensee, make sure you contact the Industrial Loan Division of the Office of the Commissioner of Insurance.
The Office of the Commissioner of Insurance, Industrial Loan Division
- Address: Two Martin Luther King, Jr. Drive. West Tower, Suite 704. Atlanta, GA 30334
- Phone: (404) 656-2078
Need to report a predatory lender in Georgia? Download the Office of the Commissioner of Insurance, Industrial Loan Division complaint form.
Outside Help for Payday and Title Loans in Georgia
Aside from the Office of the Commissioner of Insurance, you can find further help and guidance through Georgia Department of Law’s Consumer Protection Unit. Georgia victims of payday and title lenders also have the option to pursue criminal action through their local district attorney or solicitor.
You can contact the Consumer Interest Section of the Georgia Attorney General’s Office by mail to report a payday or title lender. However, the office does not take action against unlawful payday lenders on behalf of any one consumer. Instead, it acts for the benefit of the State of Georgia.
To contact the Consumer Interest Section of the Georgia Attorney General’s Office, you can send your complaint by mail to:
Consumer Interest Section
Office of the Attorney General
40 Capitol Square, SW
Atlanta, GA 30334
And, lastly, if you believe a Georgia lender has violated the Truth in Lending Act, you should file a complaint with the Federal Trade Commission (FTC).
Consumer Protection in Georgia
Georgia continues to make strides in protecting its consumers. By making traditional payday loans illegal in Georgia, residents can rest easy knowing they won’t get taken advantage of by payday lenders.
However, the State of Georgia can still get tougher on title lenders. While title loans are capped under Georgia law, they are regulated as pawn loans, which allow title lenders to tack on fees and fines and take advantage of many consumers. If Georgia can take steps to improve the title and pawn loan regulations, it would go a long way toward protecting Georgia consumers.
Guides to Payday and Title Lending in Georgia Cities
You know predatory lenders in Georgia are a problem. But what about at the city level?
Check out these payday and title loan guides for the following cities in Georgia…
- “Georgia” United States Census Bureau. Accessed March 6, 2017. https://www.census.gov/quickfacts/table/PST045216/13
- “Experian’s 2016 State of Credit Report” Experian. Accessed June 5, 2018. LiveCreditSmart.com
- “2012-2016 American Community Survey 5-Year Estimates, Income” U.S. Census Bureau. Accessed June 5, 2018. https://factfinder.census.gov
- “Income Statistics for Georgia” Income by Zip Code. Accessed March 6, 2017. https://www.incomebyzipcode.com/georgia
- “Georgia Payday Loan Law and Legislation” UStatesLoans.org. Accessed March 6, 2017. http://www.ustatesloans.org/state-ga.html
- “State Debt” Ballotpedia. Accessed February 13, 2017. https://ballotpedia.org/State_debt
- “Legal Status of Payday Loans by State” Payday Loan Consumer Information. Accessed March 3, 2017. http://www.paydayloaninfo.org/state-information
- “Georgia’s Payday Loan Law” Center for Responsible Lending. Accessed March 6, 2017. http://www.responsiblelending.org/payday-lending/policy-legislation/states/pa-GeorgiaPayday-0606.pdf
- “Payday Loans” Georgia Department of Law Consumer Protection Unit. Accessed March 3, 2017. http://www.consumer.ga.gov/consumer-topics/payday-loans
- “McDonald’s vs. Payday Lenders” California State University Northridge. Accessed March 6, 2017. http://www.csun.edu/~sg4002/research/mcdonalds_by_state.htm
- “Title Pawns and Cash Advances” Georgia Department of Law. Accessed March 3, 2017. http://www.consumer.ga.gov/consumer-topics/title-pawns-and-cash-advances
- “Driven to Disaster: Car-Title Lending and Its Impact on Consumers” CFA. Accessed February 15, 2017. http://www.responsiblelending.org/other-consumer-loans/car-title-loans/research-analysis/CRL-Car-Title-Report-FINAL.pdf
- “Payday and Car Title Lenders Drain $8 Billion in Fees Every Year” Center for Responsible Lending. Accessed February 15, 2017. http://responsiblelending.org/sites/default/files/nodes/files/research-publication/crl_statebystate_fee_drain_may2016_0.pdf
- “Pawnshops/Title Pawn” Department of Banking and Finance. Accessed March 3, 2017. https://dbf.georgia.gov/pawnshops-title-pawn