New regulations on payday loans don't necessarily apply to car title lenders, and these lenders are finding legal ways to bump interest rates through the roof.
Latonya Reed, a policy analyst at Virginia's Interfaith Center, says some car title lenders are becoming more and more predatorial.
Reed says, "The reality is that a lot of borrowers, car title borrowers, are unable to make their payments in 25 days so they find themselves being hit with a high interest rate."
These interest rates can jump as high as 30 percent of the initial loan. As it stands now, the practice is legal, which is something Reed says needs to change.
She says, "The Virginia General Assembly has not taken up the issue of car title loan lending. They have not made a specific decision on where car title lenders are to operate."
So Reed says the center is taking a pro-active approach, contacting legislators and gaining supporters such as the AARP, in the hope of protecting vulnerable borrowers.
Reed says, "Car titles loans are small, so they should be governed by the Virginia Consumer Finance Act."
For the time being, Reed says there are alternative options such as contacting your local credit union.
She adds, "We recognize that this is not an attractive option, but talk to family members and friends rather than getting caught up in a car title loan and getting hit with an extremely high interest rate."
If you decide to take out a car title loan, Reed suggests you know the terms up front.
She says, "There is some indication that in some circumstances, the car title loan lenders are not forth right about the interest rate."
News 3 contacted several car title lenders and they chose not to comment.