The Iowa Senate has approved new restrictions on car title loans -- a move supporters say could protect borrowers from high interest rates and eventual car seizure. The measure, which goes to Governor Chet Culver, would limit annual interest rates to 21 percent on car title loans, down from the current 300 percent.

The Senate approved the bill 32-16 Monday, rejecting warnings from industry officials that the restrictions would force the industry from the state. Critics, including Attorney General Tom Miller, have pushed the
Legislature to tighten the restrictions on car title loans.

Under a typical car title loan, the borrower hands over the car's title and a set of keys as collateral. Typically, there is no credit check to see if the borrower can repay the loans, and interest rates are high with payments due almost immediately. A missed payment means a car is seized and then sold.