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Put the brakes on car pawning

Ever since the powerful title loan industry persuaded state lawmakers to legalize a form of loan sharking loosely known as car pawning, thousands of the state's low-income citizens have been taken for a ride. With the legislative session nearing an end, Tallahassee lawmakers have lacked the will to jerk this industry into line.

Legislation introduced this session purporting to regulate title loan businesses fails to set reasonable limits on the industry's ability to lend money at interest rates so high they should qualify as usury.

Using borrowers' cars as collateral, some title loan operations charge their customers interest rates of as much as 264 percent a year on cash loans. If a borrower misses just one payment, the company typically seizes the vehicle. Some never return it, even when the borrower pays.

An industry-backed bill that recently passed the Senate would effectively cap interest rates at 96 percent each year, using a formula that sets variable interest rates during the first year of the loan.

That figure is a small improvement, but it is still shamefully high. Most lenders cap their annual rates at about 18 percent. A companion measure in the House that would set up a three-tier interest schedule also fails to impose adequate controls on this industry's exploitive tactics.

More often than not, car pawn schemes prey on low-income people with serious financial difficulties. Many have been turned down for loans from legitimate lending institutions and turn to these establishments in search of emergency money. Fear or desperation typically drives borrowers to agree to pay exorbitant interest rates.

Florida's usury laws are supposed to make it illegal for businesses to get away with taking advantage of people in this way. When will the Legislature make the title loan industry abide by them?