During a meeting last month of Chesterfield’s Planning Commission, four auto title lending cases were approved. The five member commission reviewed the conditional-use requests, for vehicle-lenders before they will be considered by the Board of Supervisors (BOS) on June 26.
The BOS will consider these requests as conditional-use cases due to a new ordinance amendment that allows loans secured by ones vehicle title. Supervisors have never approved any type of check cashing establishment, motor vehicle title lender, pawnbroker, payday lender or precious metals dealer in the county in the past until recently, when a new ordinance amendment was put into play.
The locations of the title lenders is of particular interest. Two would be located in the Bermuda District on Jefferson Davis Highway, separated by 1.1 miles. The ordinance states that one mile is the closest these lenders can be. One of what many call predatory lenders, Title Max, is asking for permission to locate in the now vacant 7-Eleven at the corner of Jefferson Davis Highway and Osborne Road. Another would be located in the Panera Bread strip center. Two others would be located on Midlothian Turnpike.
“The concerns that I have heard are relative to the business model; that some of these establishments are rather garish and obtrusive,” said Dale Patton, Bermuda District Planning Commissioner. “But I think staff has done [followed guidelines] as far as the proffered conditions pertaining to this case. This is an abandoned 7-Eleven on the Jefferson Davis corridor and any activity is good, and we have boxed these AFIs the best we can.”
Dana Wiggins of the Virginia Poverty Law Center (VPLC), said she hopes that the way Chesterfield has crafted their ordinance will limit the number of alternative financial institutions (AFI) in the county. At an interest rate (APR) of 220 percent the maximum according to Virginia law, Wiggins said lenders typically get real close to what the law states.
“In our opinion, not having one of these lenders right around the corner makes a person less likely to use one,” Ms. Wiggins said. “Some will drive out of the area to make a loan in another area just to avoid embarrassment.”
The VPLC runs a hotline, which receives calls related to people who have gotten in trouble borrowing at a title loan lender. Wiggins cited a particular case in which a woman made a small loan and then lost her job. She continued to make payments, although not full payments, and intended to repay the loan with her income tax check. After losing her job she began to rack up interest charges and called the center to ask how to get out of financial trouble.
Wiggins added that “These types of lenders are not good for the businesses around them. An employee who has to worry about how to pay back a high-interest loan is likely to be distracted [during their workday].”
Speaking of how the BOS will handle the four cases next week, Planning Director Kirk Turner said, “Board members want to promote reinvestment in the county.”
Mr. Turner said that revitalization areas have changed and what was once a revitalization area at Jeff Davis and Osborne is no longer considered a revitalization area due to its recent new construction. He said he was looking forward to see what the new revitalization planning team will come up with.
Carl Schlaudt, a planning manager now working with the revitalization team, said that he thought the county had made a good compromise with the lenders and the VPLC.
According to the Memphis Daily News, “Anyone unlucky enough to get caught up in the debt cycle that often accompanies auto title loans would no doubt be familiar with the more unpleasant fees that lenders are allowed to charge.”
During the Planning Commission meeting, which considered the four vehicle title lender businesses last month, attorney’s promoted the benefit of the lenders to businesses in the community.
“Initial discussions [with staff] as far as the locations they wanted, narrowed down dramatically,” said Carrie Coyner who represented Community Loans of America. It helped the community understand where these businesses could be located. We did receive some very favorable responses from businesses in that area.”
While Virginia has a law requiring a 24-hour cooling off period concerning paying off an older loan with a new loan, Wiggins said that, according to several of their clients, in many cases an AFI client will get a loan, come into the lender to refinance the loan, and the lender will not enter it into the computer until the next day, thereby getting around the state law of not rolling over loans.
“You have to weigh the economic impact it may have on certain groups of people as well as the economic impact it may have negatively on others in the community,” Wiggins said.