Auto title loans in California grew by more than 10% in number and dollar value last year and the market has almost doubled since 2011, according to a new report.
Aggregate principal on auto title loans in 2014 grew 14.1% to $381.9 million, compared to the previous year, the California Department of Business Oversight said on Friday. Total principal increased 185% between 2011 and 2014.
The number of auto title loans in 2014 rose 16.2% to 106,373. The total number of loans rose 179% between 2011 and 2014.
Among all auto title loans in 2014, the California banking regulator said 99% of those loans were for at least $2,500; California law doesn't restrict interest rates for loans of at least $2,500.
The 10 largest auto title lenders in California accounted for 65.7% of total loans and 51.6% of total principal. LoanMart.com, a unit of Wheels Financial Group in Encino, Calif., was the largest auto title lender in the state, with 9,827 loans and $38.7 million of total principal.
The agency in December warned against the dangers of auto title loans, noting that lenders can charge unlimited interest rates on almost all of the loans. These loans also require borrowers to use their car ownership as collateral and some firms can remotely disable car engines if they miss payments, the DBO said.