Anna Bradley-Smith  |  July 8, 2021

Category: Legal News

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TitleMax Title loans road sign
(Photo Credit: Jon Kraft/Shutterstock)

Delaware-based TitleMax illegally charged customers interest rates of 132%, running a “sophisticated loan sharking operation,” a new class action lawsuit alleges.

The class action lawsuit was filed in Pennsylvania by lead Plaintiff David Mayo, who alleges TitleMax violated Pennsylvania’s Loan Interest Protection Law and Unfair Trade Practices and Consumer Protection laws.

According to the claim, Mayo experienced financial hardship over the past winter as a result of the COVID-19 pandemic and fell behind on bills and needed cash. Mayo has poor credit and was turned down for credit from conventional lenders, so, as a result of an internet search, he ended up applying for a loan from Titlemax.

On April 10, he got a 48-month loan from TitleMax for $7,751.39 at an annual percentage rate of 132.01%. He alleges that the total loan repayment, which includes a finance charge of $33,452.71, is $41,204.10.

“In total, TitleMax seeks to be paid a total of $41,204.10 to satisfy a loan for $7,751.39,” the claim states.

Mayo says in the class action lawsuit that the legal rate of interest for an unlicensed lender in Pennsylvania is only 6 percent per annum, meaning the permissible finance charge on his loan with TitleMax is only $986 and what the company says he owes exceeds the permissible charge by $32,466.71.

Mayo’s loan is secured by his 2020 Ford Fusion, which has a market value over $20,000, and TitleMax is threatening to come to Pennsylvania and repossess the vehicle unless he pays $33,452.71 in interest, the claim says.

“Mr. Mayo needs his Vehicle for transportation to work, and will suffer substantial and irreparable injury if the Vehicle is repossessed, including loss of income and the loss of ability to support himself,” the class action lawsuit reads.

At $858.42 per month, the payments on the loan are higher than Mayo can afford, and the $33,452.71 in interest he is scheduled to pay on the loan “is money Mr. Mayo needs for his own living expenses in Pennsylvania for basic necessities for things such as rent, food, clothing, healthcare, transportation, and communications,” according to the claim.

Mayo alleges that Titlemax hid the loan terms when he took out the loan, with the loan officer preparing the agreement on a computer with the screen facing the loan officer.

“The loan officer had Mr. Mayo accept the agreement on the computer, but the loan officer did not turnover control of the computer to Mr. Mayo so he could see the entirety of the agreement he was accepting. TitleMax did not let Mr. Mayo see the disclosure of the annual percentage rate, finance charge, total payments, or payment schedule,” the class action lawsuit claims.

According to the claim, TitleMax runs a “sophisticated loan sharking operation in which it makes small loans at triple digit rates of interest” to consumer borrowers secured by their cars.

“These loans are used to exploit borrowers with poor credit and a crushing need for cash,” it reads.

For each loan TitleMax makes to a customer in Pennsylvania, the company acquires a property interest in collateral located in the Commonwealth and records a lien on the collateral with the Pennsylvania Department of Transportation, the claim says.

However, the class action lawsuit says that TitleMax’s rates of interest violate Pennsylvania law, whose usury statute is unwaivable. It says that while TitleMax insists that it can make Pennsylvania borrowers waive the law’s protection by having them sign a loan agreement that contains a Delaware choice of law clause, that is not the case.

“The Delaware choice of law clause is unenforceable,” the claim reads.

Mayo wants to represent a class of Pennsylvania who may in the future enter into an agreement with TitleMax for a loan with an interest rate above 30 percent . He is suing for violations of Pennsylvania’s Loan Interest Protection Law and Unfair Trade Practices and Consumer Protection laws, and seeks certification of the Class, damages, attorney’s fees and costs.

Have you ever been charged an interest rate on a loan that was more than 30 percent? Tell us about you in the comments section!

Mayo is represented by Robert F. Salvin, Esq.

The TitleMax Interest Class Action Lawsuit is Mayo v. TitleMax of Delaware, Inc., in the Court Of Common Pleas, Philadelphia County, Pennsylvani


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251 thoughts onTitleMax Hides 132% Interest Rate When Loaning to People in Financial Hardship, Class Action Alleges

  1. Jachele Davis says:

    I took out a $1,500 loan title loan to be exact, and now they’re charging me almost $8,000 to pay it off. I understand interest but this is absolutely ridiculous. How do I include myself in this class action against TitleMax?

  2. Dulce Garcia Saenz says:

    Hi title max has trasspassed me and my wife from the property where we got the loan at she assaulted my wife . My wife has a loan with them and is going threw heart surgery we have had 3 deaths in the family and the title max has did some thing to her account we have made 4 payments in cash before we got trasspassed and our loan is still the same where has our payments went ?

  3. Beatrice says:

    I took out a loan with title max for 1500 now I have to pay them pack 4000 I already paid them what I owed them but they said I have to keep paying them for another year that not right .
    Can I sue them back for paying them more then what I borrowed need your help it’s stressing me it so wrong how title max can do this to me I needed help I didn’t want to pay that much money I don’t have

  4. Beatrice says:

    I took out a loan with title max

  5. Kenyell Andrews says:

    I still don’t know how much my interest rate is and this is almost 2 years later

  6. Luciano Martin says:

    Where do I file for the title max class action law suit ???

  7. Sylvia Trujillo says:

    I have a title loan with title max I am paying 186 percent interest rate and New Mexico state law states they can only charge 36 percent I have tried to refinance and lower my payment but they say they can’t be cause there are no more stores in our area and since my loan was processed a few months before the 36 percent law passed I don’t qualify for it to be changed disgusting people to deal with . They call threatening 5 times a day to repo my vehicle!

  8. Stephanie Chandiwala says:

    Titlemax in Cullman, AL is charging me $489 a month for a $2800 loan that will be impossible for me to pay back because they charge 304% interest, therefore the $489 payment is just the interest rate. I’m working on my credit with National Debt Relief and they have been great but they can’t prevent my car from being seized. I’m in a dire situation. My husband has been out of work for a year, due to being severely attacked and disability is giving him the run around. My credit is poor due to Covid and I had to figure out a way to pay utilities and buy food; not worth it. Just made the hole that we’re in deeper. I’m so upset!! Titlemax should be illegal! I hate the state of Alabama for allowing all this corruption, yet they won’t approve a lottery?!? It’s ridiculous! I guess we’re going to lose our car and our home and be homeless!

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