By on December 15, 2014

Randy Richardville, King of Financial Slavery in Michigan Since 2014

Michigan Senate Majority Leader Randy Richardville of Monroe, the senator behind the bill that would allow auto title loan companies to do an end-run around the state’s title loan ban by posing as pawnbrokers, proclaimed the 276-percent interest loans the title companies would provide consumers weren’t predatory.

The Detroit News reports the outgoing senator said as much before reporters last week during the state legislature’s lame-duck session, adding that he isn’t trying to “ram the bill” through said session, despite introducing it the day after Election Day, and making sure it could bypass committee on the way to the floor for vote.

Richardville also said bank and credit union representatives were meeting with those in the pawn industry to reach a compromise on the bill, which was news to one of the bill’s opponents, Michigan Pawnbrokers Association president Mark Aubrey:

The Michigan Pawnbrokers Association has not been contacted by any agency for compromise. There is no middle ground here. Title lending has no place in the Pawnbroker Act and no place in the pockets of Michigan’s consumers.

Should the bill — No. 1138 in the Senate, No. 5954 in the House — pass, a loan of $1,000 that adds $360 of interest in 12 months — based on a cap of 3 percent per month — would pull in $2,760 within the same period at an interest rate of 276 percent annually, thanks to a 20 percent so-called “usage fee” charged monthly.

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75 Comments on “Richardville: Michigan Doesn’t Allow ‘Predatory Lending’...”


  • avatar
    jrmason

    On my commute to work I drive by a cash advance loan company. Instead of collecting pay stubs and a blank check, they collect the title to your vehicle. I can’t imagine being in such a position that I had to put my transportation up for collateral. People rely on their vehicles to get them to work, take their children to doctors appointments and school functions, and these scum bags are taking advantage of them during hard times. Every week there are new cars in the fenced in yard behind the store. Its completely sickening to me that there are people out there who will take advantage of another persons hardships. I hope someday these dirt bags are in the same boat so they can feel what its like to be kicked while your down.

    • 0 avatar

      So what,they should loan money with no collateral? Would you prefer that people down on their luck, the irresponsible, or whatever, have no access to credit? Borrowers don’t have to take advantage of the high interest loans. They can go to regular banks, or if their credit sucks, they can go to Tony and Guido at Kneecap Loans and Auto Sales.

      What is YOUR solution?

      • 0 avatar
        jrmason

        Wow. Apparantly you have no problems with this type of thievery, and may even be capitalizing off of those who are in these situations so anything else I say will be a waste. Hopefully you will never be in the situation where your forced to make decisions you never thought you’d have to make, but if you do I can’t say I’d feel the least bit sorry.

        • 0 avatar
          danio3834

          I agree with Ruggles on this one, for many of the customers of places like these businesses, it’s their only option for cash other than an underground loan shark.

          It’s not pretty, but it’s better than the alternative.

        • 0 avatar

          Why don’t YOU start lending money to people who never pay attention, let alone pay anyone back, and we can see how YOU price your risk. Do you understand the difference between default and deficiency? Do you know how much it costs to repossess a vehicle? To collect a loan? Obviously not.

        • 0 avatar
          stuki

          I bet you just as many cars are “garnished” due to people in dire financial straits’ inability to make car payments on more widespread loans (or even non loan so called obligations) as these ones. Mortgage payments in recourse states, alimony etc., etc. But since those rackets are more PC, you hear very few complaints.

          Instead of politicos getting together with lobbyists and self appointed industry “experts”, just make a blanket exemption for “primary means of transportation.” Can’t touch it, can’t take it, no matter how cute sounding a trumped up excuse is offered. Or, better yet, leave each adult with, say, $50-100K lenders, lawyers, cops, courts cannot touch, no matter what. If the problem is “predatory lending” to poor people, that would pretty much cure it, without turning yet another field of human endeavor into nothing more than some petty contest of who can offer up the most PC sounding excuse for being a scummy dick.

          • 0 avatar

            Another entitlement? Everyone is entitled to a vehicle to get back and forth to work? This is another genius idea. Exactly where will the capital come from to make these types of loans, you know, the type where the borrower doesn’t have to pay it back?

            You really haven’t thought this through, now have you.

      • 0 avatar
        bunkie

        Ruggles,

        Normally I find your arguments to be well-reasoned. But this response is uncharacteristically troll-like. No one is arguing against the *notion* of using a title as collateral. What is despicable about this bill is that none but the well-off can manage effective interest rates of over 300%. These loans are nothing but a means for the so-called lenders to buy cars from the poor for pennies on the dollar.

        • 0 avatar
          Occam

          Right. I’m wondering why a loan with a vehicle title as collateral is so usurious.

        • 0 avatar

          The “well off” go borrow at a bank at bank rates. If people can’t afford the loans, they shouldn’t take them. Is anyone holding a gun to their head? If they prefer to do business with loan sharks who break knew caps, they don’t have to worry about putting up collateral for a loan. I better option would be avoiding being in the position in the first place. Go to the bank and get the needed loan.

          • 0 avatar

            The problem is there is a lot of uneducated people amongst the poor who have no idea what they signed up for. I have been in bad financial straights before but would never use on of these services because I can read the terms. But I have met people who have, they were oddly enough hard working people who had no idea how interest rates worked and it was not explained to them when they signed the dotted line. I’m usually against protecting people from themselves but in this case I think the laws need to stand.

          • 0 avatar
            05lgt

            I’ve said this before. Any business model that requires massive informational asymmetry is a con. Whether or not purchased legislators have carved the con a spot in a states laws, it’s a con.

        • 0 avatar
          ellomdian

          Glad I wasn’t the only one. Ruggles tone is almost frightening, considering how well-reasoned he typically is elsewhere…

          • 0 avatar

            RE: “Any business model that requires massive informational asymmetry is a con. Whether or not purchased legislators have carved the con a spot in a states laws, it’s a con.”

            Then wipe out these businesses and see what you get. Would you rather have them above board or in the shadows? Risky borrowers are always going to pay huge “juice.” They earned the right to that? They can just say NO.

            An ounce of prevention is worth a pound of cure. I’d like to see these lenders go out of business because people pay attention and pay their bills. But you can’t fix stupid.

        • 0 avatar
          darkwing

          I came across an interesting article — titled something like “The Problem with Title Loans”, so if it was a pro-industry piece, it at least had the decency to be sneaky about it — that asserted that repossessions are actually pretty low, like <5%.

          If that's to be believed, then while there's certainly lots not to love about title loans, they're at least not the car gathering scheme you're suggesting.

          • 0 avatar

            Title loan repops ARE fairly low, however, repops in the BHPH run about 33%. The rules for BHPH differ from state to state. The looser the rules, the more people have “access to credit,” not always a good thing.

            There are states with laws allowing wage garnishment to collect default deficiency. Other states do NOT allow that. In states where it IS allowed there are BHPH dealers who purposely put people into vehicle they know they can’t pay for. They can repo the vehicle, and after a cure period, resell it. At the same time, they are collecting wage garnishments from the previous deal. You can make the case that consumers are over 21 and have their eyes wide open. But the average American is far from financially sophisticated. Exactly how much regulation to you insert into the market? Is it the role of government to protect people from themselves. At what point does regulation stifle investment in a particular market? After all, a business can’t exist if it can’t attract capital.

    • 0 avatar
      kmoney

      “The problem is there is a lot of uneducated people amongst the poor who have no idea what they signed up for.” I would venture that more than half of people from all social classes don’t fully know what they’ve signed up re debt. I bet if you asked an average person on the street to calculate a simple EAR on a loan with more than one compounding period per year or asked them how interest was actually charged on their credit cards (i.e., based on average daily closing balance) 8/10 would get it wrong. Financial literacy is pretty sad these days.

  • avatar
    Land Ark

    I’ve already said my peace in the other post. But, one good thing about all of this is that finally we get some transparency on how the government works.
    It may be horribly depressing and infuriating, but at least you know how things get done.
    And you know what it would take for us to change the 25 year import rule.

    • 0 avatar

      What 25 year import rule?

      • 0 avatar
        Lie2me

        This one…

        A motor vehicle that is at least 25 years old can be lawfully imported into the U.S. without regard to whether it complies with all applicable FMVSS. Such a vehicle would be entered under Box 1 on the HS-7 Declaration form to be given to Customs at the time of importation. If you wish to see that form, you may download a copy from our website at http://www.nhtsa.dot.gov/cars/rules/import. You should note that the 25 year period runs from the date of the vehicle’s manufacture. If the date of manufacture is not identified on a label permanently affixed to the vehicle by its original manufacturer, to establish the age of the vehicle, you should have documentation available such as an invoice showing the date the vehicle was first sold or a registration document showing that the vehicle was registered at least 25 years ago. Absent such information, a statement from a recognized vehicle historical society identifying the age of the vehicle could be used. – NHTSA

  • avatar
    jdash1972

    The real problem comes when an older person, or someone simply uninformed or just not sharp enough to inderstand the details, is taken advantage of. Yes we’re all responsible for ourselves, but if you’re in such a tight bind that you have to pawn your car, there is NO WAY you’ll be able to escape the debt as it sky rockets at such a horrific rate. These people will wind up being wards of the state and we’ll all end up financing the lender indirectly.

  • avatar

    Perhaps we should have a government run loan system for the “unbanked” and those with lousy credit? Or perhaps the government should tell these lenders what they should loan money for? Of course, the government cannot force risk takers into going into the high risk loan business if the risk/reward balance doesn’t work for them, so if the government thinks it is in the public interest for these people to have access to credit, they’d better stay out of it other than to DEMAND complete and FULL disclosure.

  • avatar
    philipbarrett

    Actually Ruggles you’ve hit on a good idea there. Having worked some with the poor I’ve seen first hand how they are kept in the poverty cycle by cynical & predatory companies such as these. An simple illness forces a title loan, generally the vehicle ends up being repossessed and the person now longer has a means to get to work. So they became a burden to the benefit system.

    • 0 avatar

      They keep themselves in the poverty cycle. But if YOU have a better idea I think you should try it as a business. OR do you want it to be a government program?

      • 0 avatar
        DeadWeight

        The voice of NADA and loan sharks everywhere.

        How do those snake skin shoes fit, Ruggie-Bear?

        • 0 avatar

          NADA has nothing to do with either the title loan business or the BHPH business. And if I’m the voice of NADA why am I always on record as telling them to STFU about the so called Tesla issue?

          AND I’ve never had anything to do with either of those businesses. I haven’t even had anything to do with BHPH or subprime.

          BTW, how does that dunce cap fit you?

      • 0 avatar
        nickoo

        Yes. I would rather have a government program to help these people than predatory lenders screwing them over, we are likely already helping them anyways, so what is a fair loan going to add? The risk can be priced in to fully insure the loan doesn’t lose money and still not be 275% apr. Poverty is a vicious cycle and there’s no way to escape it when this is your only choice. I find people who prey on the poor to be the scum of the earth and those who support this extreme usury are just as disgusting. Most people who work in the financial industry are this type of scum, as they produce little or nothing of value and simply leech off production to steal sheckles.

        • 0 avatar
          darkwing

          How do you know that an (annualized) 275% rate isn’t already fair, given the risk? Do you have any numbers to back that up? I’m not accusing — I’m just curious. Lots of people have sharp negative reactions to these rates (and understandably so) but I have yet to see anyone come up with what a fair rate actually would be.

          Interestingly — I found some quick summaries of research suggesting that the rate of repossessions from title loans is actually pretty low. So it seems that they’re effectively collateralized, at least.

      • 0 avatar

        I’m all in for Government no interest loans for the poor on my dollar rather than forcing them into wellfare on my dollar.

  • avatar
    DeadWeight

    There comes a time when every society tilts into the “money as a god/golden calf to be worshipped above all else” phase, and leaves every pretense of attempting to strike a prudent balance between productive commerce and decent ethics/morality behind…

    …we’re so far into the worshipping golden calves cycle now that this shouldn’t surprise, let alone shock, anyone who’s been aware.

    • 0 avatar
      shaker

      You’ve got it, DW…

    • 0 avatar
      nickoo

      Agreed. Financial trickery is the name of the game at every level to squeeze those who have the least. I hate it all. From the fed screwing savers and wanna be home buyers, to the crooks on wall street, to the enablers who worship at the altar of financialization. Its all fun and games until this oil crash soon brings it to its rightful end with blood in the streets and bankers jumping out 40 floor windows.

      • 0 avatar
        darkwing

        That’s what, only 40 posts until the violent rhetoric started? (Maybe less; I haven’t scrolled all the way down yet.) That’s a little frightening — particularly coupled with the “shekel” and “golden calf” references…

      • 0 avatar

        The Fed screwing savers? Who knew? They should allow the economy to crater to save the savers? Now there’s an interesting concept. If savers don’t like the interest rate offered there are other options for them. But if they don’t get what they want they sit and pout?

        How exactly will the “oil crash” end with blood in the streets. It will be a boon to the overall global economy, and a huge boost for the U.S. economy.

    • 0 avatar
      shaker

      I’ll take the migration to “fair and just” lending practices over wishing harm, or violence, which doesn’t solve anything.

      Let the people vote on these things, not the “bought” politicians.

  • avatar
    greaseyknight

    Why do the pawn brokers have to be the voice of reason in this situation?

    I understand how people run short on cash, but title loans and PDL’s just lead to deeper financial issues that are very difficult to recover from.

  • avatar
    jrmason

    The best solution is none at all. This country needs to go back to the days of simplicity. If you can’t afford it, you don’t need it. Of course there are few exceptions, such as food, shelter, clothing,and medical but let’s be honest if those were the only reasons people asked for loans this country wouldn’t be in the financial ruins it is.

    • 0 avatar

      If we are in financial ruins why do we lead the world in GDP per unit of populations of all the countries with any real population. Just because something isn’t perfect doesn’t mean its bad.

      • 0 avatar
        nickoo

        GDP per unit is a misleading metric. Median income for all working adults is about 27,000 per individual. The median income peaked in 1968. We have been going backwards ever since while those at the top are doing better than ever thanks to financialization tactics of the last 30 years.

        • 0 avatar

          Whether we’ve gone backwards or not we still lead the world in GDP per unit of population for countries with meaningful population.

          What exactly is misleading about that? Our poor are better off that then wealthy in some countries.

  • avatar
    shaker

    A car is not a luxury in this country, it’s a necessity – having to put that at risk is a heavy burden, and one family illness (even with healthcare – only the high-deductible plans are remotely affordable) could have one’s car in hock to these predators.

    I understand that it’s a matter of “choice”, but when your back’s against the wall, you tend to make bad choices, and these scumbags are there to help (themselves).

    • 0 avatar

      So shaker. Why don’t you risk your own capital and show us how to lend money to those disadvantaged? You can set a lower rate and get all the business. What’s stopping you?

      Or are you advocating some kind of government run program? You seem to know what you are against. Do you know what you are for?

      • 0 avatar
        shaker

        Oh stop with that rubbish.

        The Government and charitable organizations (both of which I donate to on a regular basis) should try to work on this problem and put the predators out of business.

        That won’t happen because these thieves donate regularly and generously to politicians using poor people’s money, while they suck on fat cigars and laugh.

        • 0 avatar

          IC, so you want the government and charitable organizations fixing this “problem.” I’m all for seeing them try. After all, government can probably do it better than private capital but are they ever in for a surprise. Its kinda difficult to tell who is a righteously needy person and one who is needed because they gambled away their rent money. I’m sure we want taxpayers subsidizing that. Make it too easy and you will need an awful lot of capital to fund the title loan/PDL business. People can make up all sorts of stories. Adverse selection grows exponentially when the terms are too reasonable. But I’d be happy to see anyone who wants learn this expensive lesson. Show us how its done.

        • 0 avatar
          rodface

          What to do in the case that a lawmaker is the owner of a chain of payday loan stores and actively fights legislation against his own business (here in Texas, the name escapes me)? Payday loans are not title loans but I would say that they’re equally predatory.

  • avatar
    jpolicke

    The mistake in the argument against title pawns comes when you annualize the interest rate. These are meant to be short term loans, admittedly costlier than conventional sources of credit, that never extend for a year. Quoting an annual APR makes no sense. I might stay a couple nights in a hotel that charges $100 a night; it makes no sense to complain that living there would cost $36,500 a year.

    • 0 avatar
      bikegoesbaa

      Agreed, expressing fees or other short-term costs as an APR seems fundamentally misleading although mathematically accurate.

      I’m sure that the $3 fee that an ATM charges do dispense $60 would translate to an stratospheric APR if calculated as such. Are ATM fees “usury?”

    • 0 avatar
      beastpilot

      I’m always amazed at all the financially savvy people I know that will lease a Chevy Spark for $1,600* a month. That’s $19,000 a year on a $12,000 car! Heck, sometimes they will lease a minivan or SUV for $4,500 a month. Fifty-Four grand a year!

      *Alamo 1 day rental rate for a Chevy Spark in Portland, OR

  • avatar
    udman

    It looks like Michigan (along with Wisconsin) is in a race to see if they could become just like the old south… Having companies prey on the disadvantaged, keeping them in a cycle of poverty and neglect while the business owners keep getting ever more wealthy off their backs… It really makes me sick.

    I always thought the industrial states of the North were so far above this type of garbage, but I now see that they want to become another Mississippi in the worst way.

    And if I have insulted anyone in Mississippi, I’m really not at all sorry. Your history has been one of neglect and hypocrisy. I have only been within your state once, on a business trip, to Clarksdale… First impressions? Get me the hell out of here…

    So I guess the politicians with the (R) affixed to their name want and need a permanent underclass so they can feel superior…

  • avatar
    ZoomZoom

    I think we have too many safety nets. They require too much financial support, the responsibility for which keeps getting pushed onto an ever dwindling number of producers. This is hampering our freedoms and our economy, but worst of all, it assumes that one class is unable to look out for itself.

    While that may or may not be true, I find this level of assumption to be insulting and demeaning, and I think it’s killing our national soul.

  • avatar
    JD321

    Predatory Lending? No mention of “Retarded Borrowing”?
    All people can take it or leave it and shop for a better rate…Or do they have a gun to our head?…Only bratty little parasitic left-wing runts cry “Predatory Lending”.

  • avatar
    shaker

    Life is more “fair” for some than others. Republican-sponsored riders stuffed into the new budget bill would re-institute taxpayer-funded backing (bailout) of risky “investment” by the biggest banks in this country, who essentially pay ZERO INTEREST on borrowed money to begin with (and who are kind enough to pay me .15% on my savings, in return).

    Meanwhile, title-loan lenders spend millions of dollars on political influence peddling to grow their profits.

    http://www.huffingtonpost.com/2012/03/15/roderick-aycox-auto-title-loans-romney-super-pac_n_1348215.html

    There seems to be an undercurrent that those who would borrow money against their vehicle are somehow ‘subhuman’, while those who make money lending them money under these usurious terms are businessmen, ‘pillars of the community’, so to speak.

    • 0 avatar
      Lie2me

      “Life is more “fair” for some than others”

      It’s way more fair to those who have a congressman in their back pocket

    • 0 avatar
      darkwing

      Yep, mean ol’ Republicans like Pelosi and Obama twisted arms to get it passed, over the heroic objections of Democrats like Warren and Cruz. Honestly, I’m no fan of the provision either, but it’s hardly an excuse to devolve into hackneyed (and inaccurate) partisan screeching. Unless, of course, it’s all about making yourself feel virtuous, and your concern for the poor ends at keeping score…in which case, have at it.

    • 0 avatar

      Those who borrow against their vehicle are free to shop for the best deal. What’s your problem? Why don’t they just go to a bank or a CU and get a cheap interest loan?

  • avatar
    319583076

    Every man is given the key to the gates of heaven, the same key opens the gates of hell.

    Contrary to some people’s wishes and beliefs, we cannot all be saved. Nature’s cruel, and that’s a fact no man nor policy can change.

  • avatar
    manu06

    If I was not going to be on the hook for the result of predatory lending then I might look the other way but it just allows people to dig a deeper hole. Usury laws used to balance the needs of borrowers and lenders. Those laws are being rolled back to the greater
    detriment of everyone.

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