Two car-title lenders settled Federal Trade Commission charges that they used deceptive advertising to market their loans. A car-title loan is a high-cost short-term loan that’s secured by using the consumer’s vehicle as collateral.
FTC says Finance Select and First American Title Lending of Georgia advertised, both online and in print, a zero percent interest rate for a 30-day car-title loan without disclosing important loan conditions or increases in finance charges. If a consumer doesn’t repay the loan within 30 days, increased finance charges take effect and can result in a consumer paying hundreds or thousands of dollars in fees or forfeiting his/her vehicle, FTC says.
As a result of the settlements, the defendants are prohibited from the following: failing to disclose all of the qualifying terms that are associated with obtaining a loan at its advertised rate, failing to disclose what the finance charge would be when an introductory period ends and misrepresenting any material terms of any loan agreements. In addition, First American Title Lending also is prohibited from stating the amount of any down payment, the number of payments or the period of repayment, or the amount of any payment or finance charge without clearly stating all of the required terms.