Federal watchdog sues 5 Arizona auto lenders

PHOENIX — Five Arizona companies that offer loans secured by automobile titles have been sued by a federal agency.

The Consumer Financial Protection Bureau said the five auto-title lenders failed to disclose interest charges in a required format in online advertisements. The targeted companies are Auto Cash Leasing LLC, Interstate Lending LLC, Oasis Title Loans LLC, Phoenix Title Loans LLC and Presto Auto Loans Inc.

According to the bureau, the five companies didn’t disclose the annual percentage rate on their loans in ads. The APR reflects interest expense and other charges in a standardized format. Rather, the companies cited various other rates that were typically lower.

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Auto title loans, which are targeted to borrowers with low credit scores, are secured by the title to a vehicle, which serves as collateral. If a person can’t repay the initial loan, he or she must borrow again or risk losing the vehicle.

The bureau is seeking monetary penalties and administrative orders requiring the companies to correct their practices. The federal Truth in Lending Act requires lenders to advertise loan interest rates using the APR.