Car title loans are facing intense scrutiny after vehicle owners in Canada reported having their cars repossessed over missed payments, leaving them stranded and facing thousands of dollars in recovery fees. According to reporting by CTV News, borrowers who used their paid-off vehicles as collateral for short-term cash loans found themselves locked out of their cars and burdened with steep administrative, towing, and storage costs.
How Vehicle Title Loans Trigger Repossessions
Title loans require borrowers to hand over their vehicle ownership documents as collateral for cash. Heidi Deveau, a small business owner from Oakville, told CTV News that she took out a $1,000 title loan from BHM Financial three years ago using her paid-off Jeep Wrangler as collateral. Deveau stated she had paid $2,500 toward the $1,000 loan amid various missed payments before learning last fall that she still owed $4,000 to get the vehicle back.
“I can’t even remember why we needed the money at the time,” Deveau said in an interview with CTV News, adding that she needs her vehicle for work and is facing eviction over the financial fallout. Similarly, Morgan Hempen of Digby, Nova Scotia, told CTV News that her vehicle was repossessed by the same lender after a bank account change led to missed payments. Hempen reported paying $5,800 to reclaim her car, stating she is a single mother who could not afford the unexpected expense.
Lender Rationale and Insolvency Expert Advice
In a statement provided to CTV News, a spokesperson for BHM Financial defended the practice, stating that repossession is used only as a “measure of last resort” after exhausting communication efforts with customers in sustained default. The lender noted that additional costs such as non-sufficient funds fees, bailiff charges, storage, and transportation expenses accumulate when accounts go into serious default, though the company maintains it remains open to negotiating payment arrangements.
Linda Paul, a licensed insolvency trustee with MNP Ltd., told CTV News that taking out such loans means borrowers effectively surrender their rights to the vehicle if they fail to meet the repayment terms. “You’re essentially giving up your rights to the vehicle to the lender and saying if I don’t make right on this agreement then you have the right to seize it,” Paul said. Deveau remains in a dispute, seeking the return of her Jeep and financial compensation.