As the wave of joblessness crashes, quick-cash outlets could be about to reap bonanza – By Kevin G. Hall (Miami Herald) / March 26 2020
On the website of the nation’s largest car-title lender TitleMax and its Florida subsidiary InstaLoan, a letter from Otto Bielss, company president, reassures customers that 1,176 locations nationwide are being sanitized daily and are being cleaned like never before “to ensure that your financial needs continue to be met quickly and effectively.”
Nowhere in the full-page letter or on the website is there an offer to defer payments or similar measures to help existing customers tossed out of work because of the coronavirus.
Title loan companies are the bottom of the financial food chain. They offer small, high-cost loans to the weakest borrowers, referred to as the unbanked because these borrowers often lack a conventional checking account and are desperate enough to offer up the title of their car as collateral.
The companies provide a type of rolling loan that consumer advocates call a debt trap, while the lenders themselves say they provide an important service by supplying credit to those who otherwise would not qualify.
A $2 trillion economic stimulus passing through Congress seeks to get cash into the hands of working Americans to help recover lost wages and to significantly boost unemployment insurance. But those temporary patches are designed to ease the pain in hopes that the virus will be contained in the weeks ahead and the economy will return this summer to something approaching where it was.
For millions of low-wage workers and the unbanked, companies sometimes viewed as predatory lenders —cash advance firms, car-title lenders and payday loan companies — may fill the void.