Auto Title Loans: Market Practices and Borrowers' Experiences

The research base on title loans is far smaller than that on similar subprime small-dollar credit products, such as payday loans. To begin filling this gap, The Pew Charitable Trusts conducted the first nationally representative telephone survey of borrowers, a series of focus groups, and an examination of state regulatory data and company filings to illuminate practices, experiences, and problems in the title loan market.This report details these findings, and shows that the title loan market has many similarities with the payday loan market as well as several important differences, such as larger loan sizes and the risk to borrowers of losing a vehicle. Overall, the research demonstrates that the title loan market suffers from the same fundamental problems as the payday loan market, including unaffordable balloon payments, unrealistically short repayment periods, and unnecessarily high prices