IS SHORT, SOME PEOPLE TURN TO
PAY DAY OR TITLE LOAN COMPANIES
FOR QUICK CASH.
BO:
WHILE THESE BUSINESSES SERVE
A PURPOSE, THEY HOWEVER COME
WITH CONSEQUENCES IF
YOU DON'T PAY YOUR LOAN BACK
WITHIN A MONTH.
KRISTIN:
WATE, SIX ON YOUR SIDE CONSUMER
REPORTER DON DARE SAYS THE
INTEREST RATES ARE EXTREMELY
HIGH IF YOU ROLL OVER YOUR LOAN.
DON:
THE ANNUAL PERCENTAGE RATE
IS CLOSE TO 3- HUNDRED PERCENT
AND IT'S LEGAL.
CAR TITLE LOANS OFFER YOU QUICK
CASH IN EXCHANGE FOR YOUR
VEHICLE'S TITLE AS COLLATERAL.
GENERALLY, CAR TITLE LENDERS
HAVE FEW REQUIREMENTS FOR
POTENTIAL BORROWERS.
YOU CAN OFTEN DRIVE AWAY WITH
THE MONEY IN LESS THAN AN HOUR.
BUT THESE LOANS ARE EXPENSIVE,
IF
YOU DON'T PAY IT BACK WITHIN ONE
MONTH.
SO, YOU NEED TO UNDERSTAND THE
TERMS OF THE AGREEMENT.
DON DARE: WHEN DID YOU BUY THIS
CAR? GERALDINE KLINE: JUNE
2017. DARE: IT'S A KIA
GERALDINE: YES. GERALDINE KLINE
HAS BEEN PLEASED WITH HER SIX
YEAR OLD CAR WHICH IS
PAID OFF.
GERALDINE: JANUARY OF 20-18
DARE: PAID IN FULL. GERALDINE:
YES.
FOUR MONTHS AGO, HOWEVRE,
MRS. KLINE WAS SHORT OF CASH.
USING HER CAR AS COLLATERAL, SHE
TOOK OUT A TITLE LOAN ON THE 8TH
OF JULY.
GERALDINE KLINE: I WANTED TO
BORROW EXACTLY THE 25-
HUNDRED. BUT FROM MY
UNDERSTANDING, IT WILL BE A
LONG TIME TO PAY IT BACK. I
ASKED HER HOW LONG AND SHE SAID
MAYBE ABOUT A YEAR. I SAID
THAT'S NOT TOO BAD.
THE TERM OF THE TITLE LOAN WAS
FOR 30 DAYS, ACCORDING TO THE
CONTRACT. GERALDINE SAID SHE WAS
TOLD AT THE LOAN COMPANY, SHE
COULD ROLL-OVER
THE ADVANCE. HOWEVER, MRS. KLINE
SAYS SHE WAS NOT AWARE THAT 267
PERCENT IS THE ANNUAL
INTEREST RATE.
GERALDINE: WHEN I ASKED HOW LONG
IT WOULD TAKE TO PAY IT,
SHE SAID ABOUT A YEAR UNLESS YOU
WANT TO PAY IT
ALL AT ONE TIME. SHE SAID YOU
CAN DO THAT NEXT MONTH IF
YOU HAVE THE MONEY.
SO FAR SHE'S MADE FOUR PAYMENTS
ON
THE 25-HUNDRED DOLLAR LOAN.
GERALDINE: I'VE PAID A LITTLE
OVER 21 TO 22 HUNDRED
DOLLARS ALREADY IN FOUR MONTHS.
IT'S THE PAYMENTS
GOING UP AND UP THAT IS THE
PROBLEM. WHEN YOU LIVE ON A
FIXED INCOME, YOU CAN'T GO IN
THERE PAY 550 ONE MONTH
BY STATE AND FEDERAL LAW, TITLE
LOAN COMPANIES ARE UPFRONT WITH
THEIR AGREEMENT TERMS AND THEY
ARE STRICTLY REGULATED. DARE
READS: THE TRUTH IN LENDING
DISCLOSURE SHOWS
THAT YOUR ANNUAL PERCENTAGE RATE
IS 267 -
PERCENT. GERALDINE: I SHOULD
HAVE READ THAT. THAT IS MY
FAULT FOR NOT PAYING ATTENTION
TO DETAIL.
JOHN FAWAZ, UTFCU: WHEN YOU ARE
BORROWING 25-
HUNDRED, A LOT OF TIME VERY FEW
PEOPLE CAN PAY IT OFF IN
JUST A MONTH.
JOHN FAWAZ, A FINANCIAL PLANNER
AT UT FEDERAL CREDIT UNION, SAYS
ONCE A BORROWER GETS BEHIND ON A
TITLE LOAN THE INTEREST RATE
PILES UP.
JOHN FAWAZ, FINANCIAL EXPERT:
EVEN THOUGH YOU
THINK I CAN DO IT, IT IS REALLY
TOUGH. WELL SOME PEOPLE
SAY I'LL PAY IT OFF IN A YEAR,
WELL IN A YEAR YOU PAY 2-
THOUSAND EXTRA IN INTEREST. YOU
KEEP IT THREE YEARS,
WELL NOW YOU ARE PAYING EIGHT-
THOUSAND IN INTEREST.
THEN THE PROBLEM GETS WORSE.
DARE: ROLLING IT OVER
IS THE PROBLEM. JOHN: THAT'S
CORRECT.
TITLE LOANS ARE POTENTIALLY
RISKY
BECAUSE IF YOU DEFAULT YOU CAN
LOSE YOUR CAR. IN FACT, 20% OF
THOSE WHO TAKE OUT A SHORT-TERM,
SINGLE-PAYMENT CAR TITLE LOAN
WILL HAVE THEIR CARS
REPOSSESSED, ACCORDING TO THE
CONSUMER FINANCE PROTECTION
BUREAU. AND RECORDS SHOW, ONLY
12 PERCENT
OF SINGLE-PAYMENT BORROWERS
REPAY
WITHIN 30 DAYS.
MRS. KLINE SAYS SHE'LL CONTINUE
TO MAKE HER LOAN PAYMENTS AND
HOPES SOON TO GET OUT FROM
UNDER THE DEBT.
DARE: YOU WANT TO GET THE CAR
PAID OFF BY WHEN?
GERALDINE: FEBRUARY OF 2020.
DON:
PAYING OFF A TITLE LOAN IS THE
MOST
STRAIGHTFORWARD APPROACH TO
AVOIDING THE HIGH INTEREST
RATES.
ONE OPTION TO REPLACE THE TITLE
LOAN WITH CASH IS TO TAKE OUT A
DIFFERENT LOAN,
A FIXED RATE LOAN FROM A BANK OR
CREDIT UNION WHICH IS OFTEN LESS
EXPENSIVE THAN ROLLING
YOUR TITLE OVER MONTH AFTER
MONTH.
NOW, IF ALL ELSE FAILS, SOMEBODY
CLOSE TO YOU MIGHT BE WILLING TO
CO SIGN AND HELP YOU GET
APPROVED FOR A LOAN.
KRISTIN AND BO.
THE LAST THING YOU WANT TO DO IS
DEFAULT ON A TITLE LOAN, YOU
NOT ONLY LOSE YOUR CAR,
BUT IT RUINS YOUR CREDIT.
BO:
IF YOU HAVE A CONSUMER QUESTION
FOR DON -- SEND HIM AN EMAIL AT
D-DARE AT W-A-T-E DOT COM,
OR CALL HIS SIX ON YOUR SIDE
HOTLINE
NUMBER AT 865- 633-5974.
KRISTIN:
STILL TO COME -
ITS THE HOLIDAYS.. THE PERFECT
TIME
TO GIVE AN ADOPTABLE PET - A
FOREVER HOME.
BO: