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A Rochester vehicle repossession company is among 10 firms that inked a deal with state Attorney General Eric Schneiderman to stop seizing some borrowers’ cars.
Advanced Recovery of New York Inc. joins vehicle repossession specialists in Buffalo and other Upstate New York communities as well as repo firms in California, Georgia, Michigan and Minnesota in agreeing to no longer seize vehicles for title-loan lenders, Schneiderman said Tuesday.
A type of payday lender, title loan firms advance money to borrowers who put up vehicles as collateral. Borrowers most often are low-income individuals. Lenders typically are unlicensed and disguise interest rates topping 100 percent by making monthly payments cover only interest, with a balloon payment covering principal due at the end, Schneiderman said.
Borrowers who cannot make the balloon payment have their vehicles seized. National companies take repossession orders centrally then pass on orders to repossess the vehicles to local businesses in their networks.
In New York, rates charged by unlicensed lenders cannot by law top 16 percent. To skirt the law, title loan companies set up shop in other states and market to borrowers online, the state said.
“I applaud these companies for agreeing to stop obeying orders from predatory title-loan companies that take advantage of unsuspecting New Yorkers,” Schneiderman said. “Any other business that repossesses the vehicles of New Yorkers based on illegal title loans should recognize that my office will not tolerate this kind of behavior.”
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