The Washington Informer: Regional

“Over the last few years you have been instrumental in the fight to end predatory lending. Specifically, you lent your voice to stopping predatory lending in North Carolina by urging our Black Caucus leaders to work to put an end to these abusive practices within our state,” Corbett writes. “Therefore, I was surprised to hear that you are a spokesperson for car title loans…Car title loans are just as abusive as payday loans in that they charge triple digit interest rates and trap them in a cycle of debt. Moreover, title lenders structure their loans to evade state usury or small loan rate caps, and they are over-secured.”

Corbett continues, “Today we have access to credit, but the “terms” are abusive and discriminatory. Like we rallied with Rosa Parks, all Black people need to come together to end these practices.”

In the commercial, Sharpton stands on a stage by a podium and a United States flag as if he’s still running for president.

''Finally, there's someone in Virginia who will loan money to people the big guys won't loan to!'' he declares boisterously as if doing a campaign speech. The commercial was set to spread around the country during the Christmas season.

Corbett said in an interview that in response to his overtures, Sharpton invited him to teleconference on the issue.

“They take advantage of poor people who are desperate,” Corbett says. “They charge triple digit interest rates just like pay day lenders. In fact, it’s worse because the people’s mode of transportation is at risk and their most valuable assets.”

After the teleconference, Sharpton said he decided to wait for even more specific information from Corbett, but remains doubtful about LoanMax.

“You cannot have a country where only people with credit can go to banks. I’ve got businessmen that can’t get a bank loan and they have lucrative businesses,” Sharpton says. “That’s exactly my point. Now, if this company is the wrong company, we can debate that and I will not go forward. But, I’m not going to back down at all if the banks have driven people with alternative lending services out of business. That disproportionately hurts our community. We have found nothing on the record against it, nothing to this moment.”

Rod Aycox, president of LoanMax, based in Alpharetta , Ga. , says he makes loans to a half a million people a year at 200 stores in 21 states.

“My product highly competes with every product out there. It’s a very competitive price and we deal with hundreds of thousands of customers every year who are very satisfied,” he says. “Someone has to have a title to a car, so we really don’t loan to poor people…They have to have a title that they have paid in full for.”

Aycox says his interest rates are from 22 percent to 30 percent a month. For example, the average $400 loan would cost $88 for one month, he says. If a person kept the money for only two weeks, it would cost them $44, he says. However, that same $400 loan becomes a $1,600 debt, 300 percent more, in just one year if the person is unable to pay it back.

Aycox says he does not have stats on how many customers do not pay back their loans on time, but he says it’s a very small number. He says the actual percentage of cars that have been repossessed is only five percent. The average loan is repaid in less than 3 months, he says.

“The thing about title loan companies is that they don’t take many cars,” Corbett says. “And the reasons why is because they get the people trapped into debt. And they just continue to roll them over.”

Aycox says customers who find themselves unable to repay a loan always have an out.
“If a customer is, by chance, not able to pay back their loan, all they have to do is take their car down, sell it, pay me off and keep the difference,” he says.

Even before his presidential race, Sharpton had long advocated against unfair lending practices. In a 1999 panel statement during a Federal Reserve board meeting in Boston , Sharpton said: “We want fairness; we want equity; we want parity. (Applause) We want to see loans to those that seek mortgages and business loans that are not at rates that are unbearable and not set up with clauses that are unachievable.”

Aycox declined comment on Sharpton’s decision to end the commercials while awaiting more information.

“I hate not to give you any information on that, but if you would, just call Mr. Sharpton on all of those questions. I would welcome Mr. Corbett to give [Sharpton] any information. I would welcome Mr. Corbett to call me any time and discuss my product,” Aycox said.

Sharpton says he has never met Aycox. He says he was recruited to do the commercial by a fellow activist and a personal friend of Aycox’, Lamell McMorris, a former executive director of the Southern Christian Leadership Conference under the administration of Martin Luther King III.

“I know his track record of working in the movement with me and quote-unquote, ‘the little guy,’” says McMorris. “I knew that he would understand the concept of people with bad credit needing access to cash. I know a great deal about LoanMax because the owner of the company is my best friend. LoanMax is not a predatory lending institution. As far as I’m concerned, they’re green-lining a redlined America .”

Corbett says the use of Black spokespersons for predatory lenders is a part of their strategy.

“If they can divide Black people on this issue, they can win over Democrats who are desympathetic to ruling against them,” he says.

Sharpton’s proposal to withdraw the commercials brings to mind to last September when he withdrew awards from Tyson Foods and Wal-Mart, both beleaguered with discrimination lawsuits, after he was criticized by activists.

He says he is not surprised that the commercial is controversial.

“I hoped it would be because I think that it is an outright disgrace that people that own things like cars and homes with no credit cannot get bank loans and there’s nothing that anybody is doing about it,” he says.

Sharpton says he is also concerned about fairness to LoanMax.

“You’ve got banks that repossess thousands of cars. So who decides who’s a predator? A student loan can accumulate to 500 percent. I know people 20 years later paying student loans. That’s not predatory,” he says.

Much of it is wrong, says Corbett: “These are the Jim Crow laws of today - that you charge poor and disenfranchised people triple digit interest rates. These are the Jim Crow laws of the 90s and 2000.”

Sharpton agrees, but cites what he says is the real bottom line. He says, “Somebody needs to figure out a way that our community has alternative lending. That’s my point.”