The House Commerce Committee is hearing testimony on HB562, a car title loan bill that would cap interest rates at 36%. AARP supports this bill and offers this testimony:
I am Robert Ritchie, a Fitzwilliam resident and volunteer for AARP New Hampshire. I appear today in support of this bill, which would cap the interest rate on car title loans at 36% annually. The current law, which was passed last session over the veto of Governor Lynch, allows interest of 300% per year on loans that can be rolled over 10 times. Although these are one-month loans, they can be extended up to 12 months.
We are particularly concerned about low-income members of AARP who depend on vehicles to get to work, to doctors’ appointments and to do other necessary things. This is an excessively high rate for a secured loan. These loans can place a heavy burden on our members.
According to the Center for Responsible Lending:
- Coupled with declines in the value of their largest assets—homes and retirement assets—many older Americans struggle with limited incomes. More than 13 million older adults are considered economically insecure, living on $21,800 a year or less.
- Senior women in particular face diminished incomes because of lower life-time earnings and therefore lower Social Security and pension benefits.
- Faced with insufficient incomes, many older Americans take on debt to cover medical and living expenses. The average credit card debt for older households in the US is now slightly more than $9,000, the highest average balance of any age group.
Again, according to the Center for Responsible Lending, payday loan and car title loan companies in some areas have begun to target seniors for their products
In this environment, it is easy to see how AARP members could access a car title loan to make ends meet and end up paying 300% interest for many months. We understand it is typical for a borrower to extend the loan for several months in order to pay it off. Given the age of AARP members, they have less ability to overcome this debt burden through increased income through work. Worse yet, a senior could lose their car which could result in a loss of independence. This law could also have a devastating impact on low-income elders.
For these reasons, we ask this bill be voted ought to pass.