California’s financial regulator has entered into a consent agreement with the high-cost lender LoanMart, forbidding the company from marketing or servicing certain auto title loans in the state for nearly two years.
The agreement applies to auto title loans of less than $10,000 that carry APRs above 36%, the agency said in a press release. It is in place for the next 21 months.
The settlement is the first under a 2019 California law that caps annual percentage rates on certain installment loans at 36%, the California Department of Financial Protection and Innovation said Wednesday. Previously, consumer installment loans of between $2,500 and $9,999 had no legal ceiling in California.
The department had been
More recently, LoanMart had been marketing and servicing loans from Provo, Utah-based Capital Community Bank that had APRs above 36%. Banks are generally able to export the interest rate rules applicable in their state, but the California regulators were investigating whether the bank was a secondary player in the partnership and not the actual lender.
LoanMart stopped marketing the high-cost loans in November 2020 as the investigation proceeded, according to the California agency.
“The DFPI is committed to ensuring that out-of-state banks do not exploit Californians,” Commissioner Clothilde Hewlett said in the release. “The DFPI will continue to combat any effort to evade California’s Fair Access to Credit Act and will work closely with state and federal regulators to monitor and respond to practices that hurt consumers.”
Under the settlement agreement, LoanMart neither admitted nor denied violating California law. The company, which had previously expressed confidence that its activities were fully compliant with applicable state or federal laws, did not respond Wednesday to a request for comment.
Capital Community Bank, which has $523 million of assets, also did not respond to a request for comment.
