Report: Car-Title Lenders Operating Illegally in 22 States

Car-title lenders are doing business in 22 states and the District of Columbia that prohibit the loans, according to a Center for Responsible Lending research brief released February 6, 2025 — and most borrowers struggle to repay.

Key takeaways

• The brief, "Under the Radar," documents title lending in 22 prohibition states plus D.C.
• 64.5% of borrowers could not make all their payments on time.
• 84.5% experienced "loan flipping" — refinancing the same debt at least once.
• Among late-paying borrowers, 22.9% had their vehicle repossessed.

How the loans trap borrowers

A car-title loan is secured by the borrower's vehicle title and carries very high APRs. The brief found that among borrowers who fell behind, 40.7% faced repossession, a lawsuit, or wage garnishment. The median value of a repossessed vehicle ($20,000–$30,000) far exceeded the median loan amount ($1,000–$2,000), meaning borrowers risked losing an asset worth many times what they borrowed.

What it means for title-loan borrowers

The findings suggest some lenders are reaching residents of states that ban or cap title loans through in-person and online channels. Borrowers in those states may encounter offers that are not legal where they live; state regulators and consumer advocates use such data to push for enforcement.