From his vantage point at Wolfsburg Automotive on Summer Avenue, co-owner Jim Boyd can see four title loan and cash advance businesses.
“That’s just looking out the front window,” Boyd says. “There are another four within a block of here.”
But, under a new ordinance, title lenders won’t be allowed to cluster in a neighborhood.
Earlier this month, the City Council approved a new zoning ordinance that will require payday and title lenders to be at least 1,000 feet from churches, parks, schools, and each other. The ordinance will not affect existing lenders.
“It’s a little overkill to have so many of the same businesses doing the same thing,” Boyd says. “It’s more of an eyesore than anything because they have to catch people’s attention with flashing signs and flags, and, on a street that didn’t already have that, that would be a problem.”
Cash advance and title lenders supply borrowers with quick cash, securing the loan with a contract or the borrower’s car title and tacking on high interest rates. In Tennessee, car title lenders are allowed to charge up to 264 percent interest annually.
City Council member Bill Morrison, the sponsor of the ordinance, says there are more than 200 payday and title lenders in Shelby County, and they prey on low-income neighborhoods.
“There may be a place for these institutions on the financial end, but ultimately, they are bad business,” Morrison says.
Several years ago, Memphian Andrew Ginn took out a $250 title loan. “I needed some quick cash to pay rent, and it worked out, but paying it back was another story,” Ginn says. “They ended up towing my car. I had to pay them over $500 to get my title back.”
In addition to charging astronomical interest, some say the businesses hurt neighborhood property values.
Morrison, who lives in Raleigh, says there are nine payday advance and title lenders within two blocks of the Raleigh Springs Mall. “It gives the perception of a neighborhood in decline,” Morrison says. “And if we don’t slow this down, they are going to be in every neighborhood in our city.”
Elaine Blake-Enis is the co-owner of Cash in a Flash Check Advance, which operates 12 lending businesses in Shelby County. She says the ordinance is unfair.
“Our customers are nurses, teachers, firemen, police officers, and government workers,” Blake-Enis says. “We don’t go after the poor. Our customers choose [us]. They need extra cash for unexpected emergencies, and they come to us to get that need met.”
