DAN PRESSBURG’S OPINION: COUNCIL SHOULD REJECT PREDATORY LENDERSBy Greater Long Beach
NOTE: The Long Beach City Council will decide whether to allow Pennbrooke Financial Services, LLC, a Georgia-based title loan company, to operate at the intersection of Pacific Coast Highway and Pacific Avenue0—in the 6th district represented by Councilmember Dee Andrews—after the company achieved a tie vote (3-3) by the Long Beach Planning Commission on September 20 when it appealed its Aug. 2 loss (3-2) before the commission. Dan Pressburg, a longtime and active resident of North Long Beach, opposes permitting Pennbrooke Financial Services, LLC, to open. He explains why:
BY DAN PRESSBURG
If Pennbrooke Financial Services, LLC, were to open an office in Long Beach, it would add to the over 500 locations where title loan companies do business throughout the United States. The business practices of these companies are well documented. Title loan companies tend to locate in areas close to low-income families, people who may be in such desperate financial difficulty that they are willing to put their automobiles in jeopardy by using them as collateral on loans.
Title loan companies have short-term loans similar to Payday Loan Companies in that the interest rates are very high (as much as 600% in some states) with a very short term—usually 30 days. In California, that would be any loan above $2500.00 where interest rates are open and not regulated. The Lenders Law by which these businesses get their licensing does little to regulate interest rates etc. UCC regulations provide for much governance but does not regulate the rates or usury.
Pennbrooke’s loans loans are based on about 1/3 of the trade-in value of the vehicle, but over $2500.00. The loan is for 30 days, and if the balance cannot be paid at the end of the term, the loan may be rolled over and the process started again. Pennbrooke says it will roll over its loans about four times. Seven percent of its loans result in repossession. The company will take just about anyone who walks through the door and meets its lending criteria. There is no credit verification. You must, however, own your vehicle outright.
Pennbrooke pitches itself as a supportive asset to the community, offering help to small businesses, but that falls short because there is no Uniform Commercial Code filing that could be tied into a title loan company. Small fleets of vehicles for businesses—even one vehicle—should have a UCC filing governing the property for the business. Single proprietor loans that have been paid are very limited.
Please note, the U.S. Attorney is looking at this based upon the Uniform Commercial Code that is applicable in the 48 contiguous states. The California legislature is also looking into title loan companies and their practices for new legislation governing interest rates. There is a powerful lobby fighting any changes in the state of California.
An interesting aspect of the Long Beach Planning Commission’s consideration of the Pennbrooke application is that a couple of years ago one of the commissioners did business with the owner of the property where the title loan company wants to locate. Rather than voluntarily withdrawing from the discussion, the commissioner chose to vote, explaining that no business relationship currently exists.