L.A. Clippers Make A Bad Play with 1-800LoanMart

Posted on 09 April 2012

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By Ginna Green and Cesar Castro
Center for Responsible Lending

Payday lenders have been on the Center for Responsible Lending’s radar for more than a decade, and rightly so. Their abusive loans feature triple-digit APRs—460% in California—that trap borrowers in long-term cycles of debt.

But payday loans aren’t the only high-interest, predatory loans that dot the fringe financial marketplace: Car title lending—making triple-digit APR loans that are secured by the borrower’s car—is a growing  business in the Golden State. The state’s top three car-title lenders made more than $25 million in loans in 2009. (According to the Department of Corporations, which regulates car-title lenders, 2009 is the last year for which data is available.)

What company is perched at the top of that short but dubious list?

1-800LoanMart, an Encino-based company that made $19 million of the $25 million industry-wide total. They are putting all that ill-gotten cash to good strategic use, and recently signed a multi-year sponsorship deal with one of the NBA’s hottest teams: the Los Angeles Clippers.

The Clippers know basketball, and we know bad loans. We especially know, from the crash and burn of the risky subprime lending market, that just because a business is booming, doesn’t mean that it’s a good business. Unfortunately, the Los Angeles Clippers, may not be as familiar with car-title lending and how it strips California families and communities of millions of wealth every year. We’ve started a petition to urge them to reconsider this toxic relationship and publicize the dangers of car-title lending to the financial well-being of Californians.

Car title loans may not be as well-known as payday loans, but in many ways they take up where payday loans leave off: borrowers don’t need checking accounts, but they do need a car. And that car is then on the line. Here are some key facts about car-title lending in the Golden State.

Car-title loans have triple-digit interest rates. In California, there is essentially no limit to the amount of interest a car-title lender can charge, though 1-800LoanMart stipulates that 180% APR is the maximum for their loans. To put this in perspective, a $2, 600 loan over 12 months with an APR of 180% would mean payments of nearly $500 each month. At the end of the year, they would have paid more than $3,000 in interest alone.

  • Car-title loans are secured loans. Triple digit interest rates on car-title loans shouldn’t be necessary if the lender can take back a borrower’s car. Borrowers who are having a difficult time making ends meet will often be forced to choose between making high-interest payments on their car-title loan or losing their only form of transportation.
  • Car-title loans sink borrowers in high-cost debt. Car-title loans in California are installment loans, which means that unlike payday loans they are not designed to be completely repaid within a short timeframe. But the APR is stifling, and translates into large payments that can be difficult to make for lower-to-moderate income borrowers.

In additional to these fundamental flaws in the car-title loan product, there is no shortage of complaints on 1-800LoanMart specifically. Wronged borrowers have complained about everything from misapplied payments and higher-than-expected payments to wrongful repossessions and harassment, and more.

Car-title lending is generally a bad idea. But 1-800LoanMart’s other questionable activities make it look even worse.

Shamefully, 1-800LoanMart and other car-title lenders are allowed to charge triple-digit interest rates even though every single loan is secured by the borrower’s car. But their partnership with a major and visible brand like the Clippers suggests that these flawed products are legitimate and acceptable, when really they drain millions from hard-working California families and jeopardize borrowers’ transportation.

We think that the L.A. Clippers could find a much better sponsor for their team than the leader of an unscrupulous industry. If you agree, sign and share our petition. Just as car-title lending on its own is a bad idea, it is simply a bad idea for an NBA team to legitimize it. Car-title lenders like 1-800LoanMart exploit Californians and saddle them with expensive and dangerous debt.

While the Clippers make 1-800LoanMart look good, 1-800LoanMart makes the Clippers organization look bad. Tell the Clippers to bench 1-800LoanMart today.


The Center for Responsible Lending is a nonprofit, nonpartisan research and policy organization dedicated to protecting homeownership and family wealth by working to eliminate abusive financial practices.

I think the Center for Responsible Lending should clean its own house first. The CRL is “sponsored” by John Paulson, who gave them upwards of $15million after he raked it in from short-selling the sub-prime mortgage bubble in 2008. Paulson is also a major donor to Mitt Romeny’s super PAC. Even worse, the CRL was founded by Herb Sandler, inventor of the “Option ARM” mortgage, and was one of the chief architects of the mortgage crisis.

This is not the type of business the Clippers should be providing recognition to

Interesting facts and figures i didn't know about it.