More than 2 million people a year, on average, take out autotitle loans nationwide, according to a study recently released bythe Pew Charitable Trusts. Auto title loans are growing rapidly inCalifornia and 24 other states where slack regulations have allowedthem to gain popularity. Credit unions need to take notice.

In California alone, the number of auto title loans jumped to91,505 in 2013, the latest data available, from 64,585 in theprevious year and 38,148 in the first year, 2011, that was trackedby the state Department of Business Oversight.

Short-term lenders, also known as Payday lenders, are finding away around new restrictions on payday and other small loans and aremisinforming consumers when it comes to the small print when theyuse their debt-free vehicles as collateral.

High interest rates are not disclosed to consumers and about 1out of 9 borrowers in California have their vehicles repossessed.In addition, the state has no limit on interest rates for consumerloans of more than $2,500, and it otherwise doesn't regulate autotitle loans.

TitleMax Inc. boasts that it alone makes a total of 2,500 loansa day from its 1,350 locations in 16 states.

“In about 30 minutes, a TitleMax car title loan can put up to$10,000 in your pocket and get your life back on track,” accordingto the TitleMax website.

Kyle Conger of Hermosa Beach, CA, almost lost his Ford F150truck after taking out a Paydayloan for $2,000.

“I wanted $800, but they said no deal unless I took more money.I figured I would pay it back but when my interest grew so fast Ihad to ask my mom to bail me out,” he said. “I had no idea myinterest was over 100 percent. I would have sold my truck if I knewthat was the deal.”

Loan sizes and fees vary by state, but the most common annualpercentage rate on a one-month loan was 300 percent, according toPew, which surveyed borrowers and analyzed regulatory data andcompany filings.

State law limits payday loans to $300, minus a maximum fee of$45. California also caps interest rates on consumer loans of lessthan $2,500 on a sliding scale that averages about 30 percent.Consumer loans above $2,500 have no interest rate limit.

Almost all of the auto title loans in California are above thatlevel, according to the state's business oversight department. Mostrange from $2,500 to $5,000. Of those, about 45% carried annualpercentage rates of at least 100 percent, according to state datafor 2013 which is a bad deal for all consumers. Not all, but manycredit unions offer car loans for members with less than perfectcredit.

“We always recommend that people do business with peopleand businesses they trust and if it sounds too good to be true, itprobably is. If you work with a trusted lender, they should be ableto help you find a solution that is in your best interest and fitsyour needs and your ability to pay,” said Ron Felder,executive vice president and chief lending officer atthe $2.4 billion Redwood Credit Union in SantaRosa, Calif. “RCU offers auto loan programs designed specificallyto assist borrowers with no credit history or prior creditchallenges to help them build or rebuild credit. Financialeducation is a mandatory component, to help these members establishand maintain a good credit record.”