Car Loans Legislation

Iowans have been the victims of car loan lenders that have been trying to take advantage of those seeking auto loans. Legislation is now on the table that will put an end to those who would prey on those with bad credit, but many say that the bill will only succeed in hurting people.

The Senate passed a law on Monday – 32 to 16 – that says that car loan rates can not be higher than 21%. They say it is necessary because at this moment some auto loan lenders are charging as much as 300% interest on car loans. Senator Mark Zieman, however, is one of those against the new legislation as he says it will put auto loan lenders out of business. He says that although they are trying to protect those with bad credit from being taken advantage of - that is the only kind of credit they will get.

He says that they will now be unable to get car loans as those companies that would have provided for them will not be able to survive. He says that there was a need for these types of auto loan lenders or they would not be out there. He and other Senators say that these people are working hard to get a start, and get credit, and that this is the only way they can currently do it.

However, others say that people who can’t get auto loans due to credit issues are better off without the loan, or borrowing from someone they know. They say that they are passing the law to protect these people who are getting auto loans at interest rates so high that they cannot afford to pay the auto loan back; hence continuing the cycle of bad credit. Senator Joe Bolkcom says that these unscrupulous auto loan people are simply “wrecking someone’s credit” and giving them loans that they will not be able to pay back. He says more than 1,000 Iowans lost their cars in 2005 due to high interest rate car loans that they could not pay back.

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