Auto Title Loans As a Unique Form of Alternative Financial Services: Loans, Medical Debt, and Unmet Medical Need

Background/Purpose:  Although there has been much research about alternative financial services (AFS), not much attention has been given to auto title loans (ATL) specifically.  The use of ATL was the only type of AFS to increase in use between 2012 and 2015, perhaps demonstrating how use of other types of predatory lending are increasing as regulations restrict other types of AFS like payday loans and check cashing.  Previous research has shown that the use of AFS in general is associated with higher rates of medical debt, and having medical debt is associated with unmet medical needs.  ATL is a unique type of AFS because the risk of losing a car, which might mean both a financial loss and forfeiting the primary means of transportation, may indicate the desperate financial circumstances of the borrower.  Medical debt is unique because it is typically unplanned, expensive, and comes with the additional pressure of the high-stake consequences of forgoing potentially lifesaving medical procedures.  This paper advances the field by examining the relationship between ATL as a specific and unique form of AFS, medical debt, and unmet medical needs.

Methods:  This paper analyzed 2015 NFCS data with a sample of 26,063 individuals in the United States.  The independent variables were Auto Title Loans and Medical Debt.  The dependent variable was Unmet Medical Need.  Logistic regression was performed using STATA statistical software, controlling for relevant variables based on the literature such as race, education level, annual household income, gender, housing status, marriage status, and health insurance.  Odds ratios and predicted probabilities are also examined in this analysis.

Results:  Results of the logistic regression demonstrate a significant association between having taken out an ATL in the past five years and having unmet medical need (β = .899).  Having medical debt was also significantly associated with having unmet medical need (β = 1.584). Both results were significant while controlling for several other variables.

Conclusions and Implications:  As one of the first studies to focus on title loans specifically, the relationships found between ATL, medical debt, and unmet medical need suggest that these variables can be damaging and self-perpetuating: people take out an ATL to help pay for medical debt, then avoid or delay seeking needed medical treatment in the future, their condition worsens to the point of necessitating a more costly medical intervention and subsequent medical debt.  Future research should consider examining ATL specifically to explore why it has increased in use, and also how ATL impacts its borrowers.  Social workers in various medical settings might be well positioned to help patients out of the cycle, reduce debt, and improve their health outcomes.