DETROIT (CBS Detroit) Looking for extra cash for the holidays?
WWJ’s legal analyst Charlie Langton says a bill making its way through the Michigan Senate would make it easier to get holiday cash by “pawning” your vehicle — while still being able to drive it.
“If you don’t make the payment, you lose your car,” Langton said.
According to the Detroit News, the proposed change to a nearly 100-year-old law would allow pawnbrokers to borrow money against the value of their car and charge the owner monthly “usage fee” to keep the car.
Seth Gold, vice president of American Jewelry and Loan, isn’t a fan. He said the pawn shop’s default rate is 10 percent interest.
The interest proposed in the legislative initiative is up to 23 percent per month, Langton said. That’s more than 200 percent a year in interest.
“This is bad for Michigan consumers and bad for business,” Gold said.
He added it’s not right to hold hostage the ride someone needs to get to work, to school, or to the doctor’s office. And once the interest starts piling up, chances are the person desperate enough to try to pawn their vehicle may not be able to keep up with payments, Gold cautioned.
“That’s a huge issue,” he said.
The bill, which was sponsored by state Sen. Randy Richardville, R-Monroe, could be voted on as early as today.