At Risk Car Title Loans – WFTV
Video: Action 9 Investigates Risky Car Title Loans Action 9 is investigating car title loans that consumer groups say are hitting customers with abusive repos and punitive fees.
KISSIMMEE, Fla. — Action 9 investigated a high-interest car title loan that could ruin borrowers’ finances and that Florida banned years ago.
Todd Ulrich of Action 9 revealed how new lenders have used loopholes to circumvent the ban, trapping Central Florida families with payments they can’t afford.
Dan Pagan was unemployed and desperate to pay his rent when he found a car title loan offer online. He sent the title of his Toyota vehicle to Marlin Financial for a $2,000 loan.
“It took about 3 hours and then the money was transferred immediately,” he said.
Pagan said he expected late fees when he missed his first $300 payment, but instead his car disappeared.
“I panicked,” he said. “I panicked. I wanted to know where my car was.”
A pension company took it, triggering a buy-back clause. Pagan learned that it would cost him nearly $7,000 to get his car back.
“I almost cried in tears and asked, ‘How much more? “”, Did he declare.
Consumer groups say title loans are hitting customers with abusive repos and punitive fees.
The state legislature banned high interest rates on car title loans 17 years ago. Many lenders left the state because the law capped rates at 30%. Some companies have come back and are using loopholes to sell title loans.
Sandra Arce borrowed $1,800 against her car title from InstaLoan. Paying off the loan over three years cost him more than $7,000.
“They just took advantage of me. That’s all they did,” Arce said. “And that’s not right. That’s not right.”
The interest rate on his policy seems low, but the extra insurance costs are costing him more than $200 a month.
“They never (explained) anything to me,” Arce said.
Ulrich traveled to Instaloan’s Kissimmee location for answers.
“I have questions about insurance costs. Is that fair?” Ulrich said.
“No, and you have to go out,” said a manager.
Consumer advocates said the additional fee drove interest rates up to 140% or more.
Bill Sublette, President of Orange County Public Schoolswho was previously a state official, led efforts to ban high-interest securities lending in 2000.
“They grab you, then don’t let you go,” he said.
Ulrich asked Sublette about the loopholes lenders are now using.
“I would ask (the) state attorney general to carefully consider these issues that you have reported in your investigation,” Sublette said.
Pagan said his car was sold at auction this week and he lost thousands.
“What they’re doing to people, it really hurts,” Pagan said.
Marlin Financial and Instaloan did not respond to Action 9’s request for comment.
In 2016, the Consumer Finance Protection Bureau fined TMX Finance, Instaloan’s parent company, $9 million for misleading customers about loan fees.
The CFPB ordered the company to cease its illegal practices.
Cox Media Group