DFPI Reaches Agreement to End High Interest Rate Loans Marketed by LoanMart for 21 Months
Los Angeles-based company pledges not to market or manage securities lending at rates higher than those permitted by the California Fair Access to Credit Act
SACRAMENTO – The California Department of Financial Protection and Innovation (DFPI) announced today that it has entered a new consent order with Los Angeles-based Wheels Financial Group, Inc., doing business as LoanMart, which prohibits the company from marketing or managing auto title loans under $ 10,000 with rates above 36% in California for the next twenty-one months.
The deal follows an investigation the Department launched last year to determine whether the company was escaping California’s newly enacted interest rate caps through a partnership with a foreign bank. LoanMart ceased marketing high interest loans in November 2020 as the DFPI survey of its partnership with a Utah-based bank, Capital Community Bank was on hold.
“DFPI is committed to ensuring that out-of-state banks do not exploit Californians,” said DFPI Commissioner Clothilde V. Hewlett. “DFPI will continue to fight any efforts 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 harm consumers.” “
In 2019, the California legislature passed the landmark Fair Access to Credit Act (AB 539), which caps interest rates on most loans made by state-approved lenders at around 36 percent. These cap rates came into effect on January 1, 2020. The DFPI authorizes and regulates lenders subject to the Fair Access to Credit Act and California Finance Act, the law providing the authority by which LoanMart has already made loans in California. The agreement provides that LoanMart cannot make loans through a state-chartered partner bank until September 2023, unless there is a change in law or regulation that would otherwise allow it to do so. .
In addition to regulating lenders and financial brokers, the DFPI authorizes and regulates financial products and services, including state chartered banks and credit unions, commodities and investment advisers, issuers of funds. , securities and franchises offering and selling, brokers, non-bank installment lenders, payday lenders, mortgage lenders and services, student loan managers, escrow companies, clean energy program administrators Appraised by Property (PACE), debt collectors, hire purchase contractors, credit repair and consumer credit reporting companies, debt relief companies, and more.