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Cap considered for title loan interest rates

ILLINOIS (WCIA) -- Some say car title loans have gotten out of hand. It's why lawmakers want to step in.

The car title loan business allows someone to put their car up as collateral in exchange for money. But, some say the interest rates involved aren't fair.

Lawmakers are proposing a cap since car title loan businesses charge people interest rates upwards of 300%. It locks some people into debt and puts many in jeopardy of losing their cars.

Under the Fair Lending Act, the most a lender could charge for a car title loan would be 35%. Lawmakers supporting the bill say it's a matter of protecting consumers from predatory lenders.

One woman says the $500 loan she took out ended up costing her $5,000, thanks to an interest more than 300%. She says she had to continue making payments, even after her car broke down. Now, she doesn't have a vehicle.

According to Heartland Alliance, 28 other states have banned car title loans or capped interest rates at 36%.

Lawyers for one area car title loan business declined to comment about how the cap would affect business.

The bill was filed a few weeks ago. So far, it's received support from organizations including AARP, the Coalition of Veterans Organizations and the Consumer Federation of America.

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