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Wow. That's pretty archaic, letting a title loan stand as a pawn. I think this guy's SoL, but this is the sort of low level predatory lending that people need to be protected from.
2 replies
Wow. That's pretty archaic, letting a title loan stand as a pawn. I think this guy's SoL, but this is the sort of low level predatory lending that people need to be protected from.
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Wow, that's....Brutal. I knew auto title loans were bad, but I didn't know it could be that bad. Nice profit for the loan company, though. Buy an SUV for $1800, sell it for $13,000.
@B: Oh, wait, not 13,000, that's the retail book value. At auction, they probably got around 8-9K, Still, a nice, tidy profit.
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I can't make myself feel sorry for this guy at all. I've done stupid stuff like this too, paid the price, learned, and moved on. He knew, or should have known, exactly what he was getting into. At least he's now educated as to the exact nature of the predatory lending business.
@Segador: If it is predatory lending that is ILLEGAL in all states. What some states have said is their level of predatory lending is the lender can do whatever the fuck they want. I have no problem with them repossessing the car, BUT anything over the amount owed should rightfully be his money. If you have a car payment and they sell your car over the value they are required to reimburse you for the excess collected. I would also say 300% would seem to be usury, which means he is probably better off heading to his local loan shark then this messed up company. Way to go Georgia, convince people to work with the mob instead.
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@Segador: I agree with you, I don't feel bad for the guy. He made a huge mistake and he has learned a huge lesson in thinking before acting. This man was just plain stupid.
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@Segador: I've really never understand the mentality that it's OK to abuse, exploit and/or cheat people, as long as you pick victims who are \"stupid\".
@slopirate: \"Fair\" to whom? The predatory lender? Not following why this excuses them. Is a wolf in sheep's clothing more sympathetic than a plain old wolf?
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@mythago:
So argue the stupid, but they're usually too dim to organize and do something about it.
Meanwhile, anyone with even the slightest bit of sense would know that they should read the terms of any contact they sign.
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@mythago: I think there's a difference b/w \"not feeling sorry for this guy\" and \"it's OK to abuse, exploit, etc, people.\" It's possible for both sides to be wrong. The guy was late and short on his first two payments - and he's a business owner who himself was owed money by his clients, not some fresh-faced college freshman who doesn't understand the crazy world of credit.
As someone who has made some financial f'ups of my own, I still can't feel real sorry for this guy. But it doesn't mean I excuse the lender, either.
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@mythago: Me either, mythago. Part of the problem with predatory lending is that the language on the contracts is often very complicated and misleading. Some lenders are generous enough to let you take a contract home and read it over before you sign it...but many aren't. And even if you are allowed to peruse the document, you may not be able to understand everything in it.
Yes, there is always an undertone of \"buyer beware\" in these kinds of stories, but there should also be an overtone of \"it's not OK to victimize people, even if you think they're 'ignorant' or 'stupid'\" too. You wouldn't do something so dumb? Well, bully for you. Not everyone is fortunate enough to be armed with exceptional intellect and a cool head if they get into a tough, stressful financial situation. Consider yourselves the lucky few.
The fact that you think avoiding stupidity like this requires exceptional intellect is pretty disturbing. If you don't understand something, don't sign it. That would seem to be a very simple policy. Not to mention in this case, the guy had other options and actually chose this idiocy when he wasn't forced to.
The really annoying thing is because these people are stupid, they actually take away choices and options from more rational human beings. There are probably plenty of good reasons for a person to get a short term title or payday loan based on their circumstances. Because there are morons out there who don't read the contract and then complain about it afterwards, that option is taken away from everyone else. The nanny state always restricts the freedom of everyone to cater to the stupidest common denominator.
@henwy: The fact that you think avoiding stupidity like this requires exceptional intellect is pretty disturbing.
Nail. Head. Wham.
@henwy: \"probably plenty of good reasons for a person to get a short term title or payday loan based on their circumstances.\"
FAIL.
There could never be a reason to get a loan under circumstances where if you default, you are out far more than the money you borrowed. That's retarded. That is a purely fraudulent business model, if not according to Crazy-Land Georgia's laws, certainly according to common sense. Any rational law would state that on the day of the auction, the \"lender\" (loanshark) is entitled to the principal and unpaid interest until that day, and they immediately pay the rest back to the borrower. Anything beyond that is just sick.
Anything is better than going to these loansharks. Up to and including ho'ing yourself out on the street.
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@West Coast Secessionist: \"There could never be a reason to get a loan under circumstances where if you default, you are out far more than the money you borrowed\"
can you say SALLIE MAE (or insert student loan lender of your choice here)?!?!!
& their principle, interest, & whatever other b.s. fees they want to add on are all protected by the federal gov't.
not saying i agree with the shark here (i don't)...just sayin' :/
@mac-phisto: Uhhh, student loans are actually at extremely low rates. Also, if you end up in default, it is always possible to enroll in the Debt Rehabilitation Program, where your loan is pushed back into current status after 9 months of regular, on time payments.
Research is always a good thing.
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@SybilDisobedience: You're right, too much is hidden in (intentionally) archane legal language.
That's why I'm OK with the title loan taking the car as long as they were very clear and very plain about what the fees would be and what would happen if you don't pay them. The loan company should have the burden of showing that they \"dumbed it down\" to a level that any person with a few brain cells to rub together should be able to understand.
@SybilDisobedience: I didn't notice your comment before, but want to remark on it. There's really nothing condescending in the lack of sympathy for this guy. He missed the first two payments. Not only that, but he didn't even make the full payment when he did finally pay the installments - even your most respectable creditor is going to look at this guy and say, \"Damn, he is a risk, he's already defaulted on the terms of this loan. I'm pulling the car.\"
This is not so much about innocent guy gets victimized by fine print. This is \"guy can't even make the first two payments on a loan, suffers relatively legitimate consequences.\" Even crackheads know to make that first payment to at least create the illusion of reliability.
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@mythago: I guess the question really is, \"At what point does a bad offer rise to abuse, exploitation, or cheating?\"
I'm all for laws requiring that the terms of a loan are clearly stated in a contract, but who gets to pick the point at which the penalty for late/non payment is \"too high?\"
@Segador:
I with you Segador. This guy had to have read the whole contract. If he can't meet his end of it the agency executes the contract which is to take the collateral.
Don't be stupid?
@Fresh-Fest-1986: I think he does. But seriously, this guy was asking for it. He knew it and did it anyways. If he could get a loan from his father, why didn't he ask him in the first place?? That would have been no interest, no due date, no risk and if for some reason, he can't pay back, I think his father would have been generous enough to let it go.
@Fresh-Fest-1986: Dude. The guy signs papers saying \"If you fail to pay us in exactly the method listed here, we take your car\". Guy then pays them 11 days late, and several hundred dollars short. Twice. What did he expect?
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I'm not blaming the consumer here, but it always seems like strange logic to me.
Times are unexpectadly tough, so you aren't getting by...so you risk your transportation to work, on the idea that you'll be able to pay an additional bill each month.
I understand the need, but if he could have asked his father, why not do that first? I'd sooner risk my family annoyed with me than not having a vehicle for one of the bread winners in the house.
@AlteredBeast: sometimes your family members will help you even if they themselves are not in very good financial shape. we really don't know what kind of money dad has lying around in this story - he could be skipping his own payments to help junior.
it's probably pride, but i know more than one parent that compromises their financial well-being to help their adult children that need money for one reason or another. times like these can drag a whole family down.
@AlteredBeast: you know even though this site is called \"The Consumerist\", sometimes it's ok to blame the consumer. Despite what some would like to believe, the customer is NOT always right. This is a situation where a consumer could not hold up their end of the bargain and they paid for it. Yes, the whole deal is shady, and the company seems predatory to say the least, but if he missed payments and then didn't even pay the full amount, what did he expect? It sounds like he was given plenty of chances and failed to fully deliver each time.
@AlteredBeast: It might be an issue of pride. A grown man having to go to his father for help? He probably thought he'd be viewed as a failure. And for men, just asking for help can be emasculating.
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@hovy: it is definitely an issue of PRIDE.
We just had a family member with 3 kids, a good job, come >< this close to losing his home to foreclosure because he missed ONE payment and could not keep current and then stopped paying because Countrywide told him they would hook him up with a debt consultant to help him.
He just kept letting it roll over thinking they would work out something to help him and we were kept in the dark.
He thought they would look out for HIS interests and thought he could handle this on his own and no one else would ever find out.
We found out when he had 3 weeks left before they foreclosed. They wanted over $30K in mortgage payments and fees to stop the foreclosure.
If he had contacted us for help 2 weeks earlier we could have had a lawyer get the fees waived and the total amount probably cut in half, but he waited too long and it was too late.
We had to pay the full amount Countrywide wanted to bail him out.
All because of his \"pride\".
@microcars: \"The night of the fight, you may feel a slight sting. That's pride fucking with you. Fuck pride. Pride only hurts, it never helps.\"
@microcars: Yeah, I've let situations I've been in get worse, either due to pride, or keeping the bad situation quiet from those who could help. It is a very hard lesson to learn, and habit to break.
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@microcars: That's a terrible thing that he let it go that far. But you are incredible people for helping him out with that.
Not to blame the OP, but he couldn't get two grand from his bank or credit union or put it on a credit card? I can think of about 15 places I could get $2,000 before I would take out a title loan on my car.
He should also make sure that his loan contract specifically spells out that the lender gets to keep the difference from the sale of his car. If it does, he's SOL and should have read the contract better. If it doesn't, I would think he has grounds for a lawsuit (IANAL).
@rugman11: Just because YOU have other places to go for help doesn't mean EVERYBODY does. Let them eat cake, eh?
@mythago: Still seems a bit odd that a bank couldn't set up a personal loan with similar circumstances, ie. car as collateral.
The original article doesn't say that he even bothered to look into banking options for a loan, just that he was desperate because of the housing situation and saw the loan as quick cash. If that's the case, I have zero pity for him.
@Pandrogas: being self-employed has a few advantages. one of the big disadvantages is how hard it is to prove income for a loan at a bank (or even a credit union).
i've had to turn down even people with stellar credit b/c they can't prove sufficient income to handle the loan. & once you start slipping down the credit slide with missed payments, no one's going to throw you a bone.
sometimes there is no good answer. & when desperation starts setting in, even the worst answer can be rationalized as an opportunity.
@Pandrogas: This is what I was thinking. I could go to my credit union today and get a $2,000 unsecured loan at 11%. Even someone with bad credit could probably get a secured loan with the truck as collateral. He just made the easiest choice, which was a bad one.
Also, it appears he wasn't able to make the payment after they repo'd the car. FTA: \"Friedman confirmed that he repossessed Oden's Expedition after he missed the second payment. But he said Oden had been warned it would happen. 'He made so many promises he couldn't keep. Even after the repo, he couldn't make the payment,' Friedman said.\"
Also: \"But Oden said Friedman never gave him a chance to pay off the loan after the car was repossessed, and he believes he was legally entitled to more time to pay. He said if given the opportunity, he could have paid off the loan by borrowing money from his father.\"
So he missed the 1st payment, missed the 2nd payment, promised to make the payment on the day his car was repossessed, couldn't make the payment even after they took the car, and then complains because they didn't give him enough time to get another loan to cover their loan.
After reading the whole article I have even less sympathy for the guy, other than that the company gets to keep the profits off the auction. That's sleezy.
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@rugman11: If the guy was to the point where he was ashamed to be seen walking into the store, I'm sure he exhausted every other option.
It sucks when you get up and work every day but still aren't sure whether or not you'll get paid. I really feel for him.
The story says, \"If all else failed, he knew he could ask his dad for a loan.\"
How bad must this guys Dad be for him to CHOOSE, a predatory lender over his own Father.
I guess his Dad was charging 600% APR.
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@sebadoh128: given that family's the original curse word, for all we know his dad could be very bad.
IDIOT!
Should of just asked his dad for a loan in the first place.
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Repo after 2 months seems a bit odd. Although, his story is a little odd. If he KNEW it was a predatory lend, why did he pay late and short, TWICE?
@weakdome: perhaps you missed the part of the story where he was having trouble recouping payments from his builders (the reason for taking the loan in the first place).
building contractors are having a really, really, really tough time right now. pretty much every source of income for them - new construction, restorations, renovations, even odd jobs - have all dried up. add on the fact that their commercial credit lines are drying up & if you're in the housing industry, you're pretty much f-ed.
@weakdome: I'm going to go out on a limb and say he probably didn't have it. And a 2 month repo on late payment is extreme as hell.
@tbax929:
I don't think that is a safe assumption. This guy is obviously a spazz based on the article. Hell, he could have sold the car himself and been better off and he didn't. He also acknowledges he had the money to pay off the loan at any time by asking his dad for it. So really, he had the money the entire time and just chose not to pay it.
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Here in AL, I've just taken this for granted as the cornerstone of legal usury. I never realized how unusual it was nationwide.
It seems to be \"safer\" in many lenders' minds than unsecured payday loans, but I suppose a lot of people don't really think about the consequences of really losing their cars. Why should a car be treated any differently than any other pawned item?
@Ash78: Several reasons a title loan should be different that hocking your stereo at the pawn shop:
1) Less risk: A car has a readily determined approximate auction value; this reduces risk to the lender.
2) Why should a title loan be different from a regular car loan? In a regular loan, you get the difference between the balance and the auction value + costs.
3) I could buy this at sane interest rates, but tossing this horrible practice on top of 300% interest is beyond the pale. It makes a payday lender look about as friendly as a credit union.
@sirwired: I was with you until the last credit union comment. What are you? A BOA shill? TCF? Chase? C'mon, which bank do you work for?
He didn't even make the first payment. There can really be no sympathy for this guy. The real issue here is that someone told him it was OK to wait until after the weekend to pay. That person most likely owes him a car for lying to him.
But the law should be changed so that the repo place must give the car owner any extra money generated from the auction.
But as to the risks, people know the risks. If you cannot pay your loan as agreed upon, you lose your car. One missed payment could mean you lose it. That's why these loans are mostly stupid. Anyone that is desperate enough to get one, most likely is not going to be able to pay it back or at the very least will have to miss a payment.
Did the owner of the car actually read the the fine print and all the info for the loan he was signing up for? I understand the price he paid for the loan was extremely high, but he WAS late and short for the first payment and late on the second. He hadn't shown himself to the loan company as being a \"responsible\" lender. In their eyes, he was a risky loan, so they took action. Seems a great deal of the fault here lies with him, since he didn't abide by the rules.
On the other hand, lawmakers NEED to update or replace that law. Seems like it has too much potential for abuse from the loan companies.
With the current laws, I don't think there is much he can do about it at this point. On the other hand, if none of this was mentioned in the actual contract he signed, he might have an avenue of recourse.
This story would have been a lot more interesting if he had actually paid on time and still gotten screwed over. He paid less than half of the first payment and was late, and was late again on the second payment. What did he expect to happen?
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So the lesson here is, if you sign up for something incredibly stupid, at the very least, follow through on your end of the bargain.
This guy screwed himself by failing to become informed of what he was getting into, signing up anyway, and by missing his payments.
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Is there anything we can do to blame Barney Frank or Maxine Waters for this?!
I live in Georgia and work for the bankruptcy court here. Title pawns here are one of the main reason people file. It's a shame Georgia allows these companies to remain in business, but it is what it is. Very few people really read the contract or understand the ramifications of paying late (and with the finance charges each month being $500 in his case, the odds of him being able to pay it off are minimal). In 4 months his interest alone is as much as the initial loan amount. It's a sad case, but people should know to run far far away from these places.
@noorct:
Losing a car is the main reason people file for bankruptcy? I'll have to bow to your claimed personal experience but it's hard to believe that that's what pushes people over the edge. Even if it was their only mode of transportation and they need it in order to work, you can buy a real PoS car for very little. It's hard to believe that losing the car would push them into bankruptcy when they were fine before. I mean, the loan company just snags and sells the car when debt exceeds equity, right?
I think there is something missing from this story. In Illinois the lender must wait at least 21 days before selling the car. I'm sure it's the same in Georgia. Next, title lenders DO NOT WANT to repossess cars. They want the money. If a customer is making an effort to pay, then the lender will work with them. The reasons are simple. Most people will not pay to retrieve their car once it's repossessed. When a car is then sold at auction it will most likely not fetch as much money as the loan amount regardles of the book value. Further, having customers pay interest payments, even if they are short, is far easier and more profitable than the repossession and subsequent sale of the car. This is because the repo company not only charges $300 or more for the repo, they also charge storage fees of about $25 per day, plus a transportation fee to take the car to the auction. Then the auction will take a big chunk of money from the sale of the car.
Any charges associated with the repossession and sale of a car are ultimately the customer's responsibility. When the car is sold for less than the total owed, the customer will be sued for the difference.
If someone pays 300% interest on a loan, they need only make 5 monthly interest payments for the lender to break even. Any payments received after that are gravy. Most customers intend on paying the loans back quickly, but they usually end up making 10, 20 or even 50 interest payments without touching the loan principal. Having worked for one of these predatory lenders, I can assure you they do not have the customer's interest at heart.
There are many alternatives to these loans, such as credit cards, borrowing from family/friends (painful as it may be), or pawning possessions. I'm sure there are more. To be sure, I believe in a free market system, however, after seeing so many well-intentioned customers lose their cars and suffer the consequences, it's obvious to me that auto title loans and payday loans are dangerous to consumers and should be outlawed.
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@Steve Laser: According to the article, Georgia law says the lender must wait at least 30 days before selling the car.
Since he was over 30 days late with his first payment, they were within their right to sell it.
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@BathroomDuck: Not so. In GA you have to send out a 10 day letter when you repo the vehicle. The owner has 10 days from the receipt of that letter to contact you and make arrangements. The people who pawn their titles for $300-$500 and pay it out in less than 30 days are the best customers ever. This guy in the article was late paying and did not pay the full amount. He's SOL because he signed a contract.
@Steve Laser: If you get to keep all the massive profit from selling the car (as is the case here), you most certainly DO want the car instead of the money.
@sirwired: Exactly, if this car is as customized as the OP makes it sound then the Title Loans management saw an oppurtunity to make a few thousand at this guy's expense.
Also all of you who are so quick to jump on the \"This dude is an idiot\" bandwagon do you not get the gist from the story that he didn't want to get this loan in the first place? He was in a tough spot.
Being in a tough spot, is not an excuse to make bad un-informed decisions. It is a reason, but it isn't an excuse.
And the article mentions him saying he still could have borrowed from his Father \"...if all else failed.\" Sounds to me like this guy feared his Dad more than the Loan Shark.
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@Fresh-Fest-1986: As tough a spot as he was he should have read the contract and been realistic. He's a contractor and should know to read the fine print, but his pride probably got the better of him since he wanted to get in and out as fast as he could.
NEVER patronize a place like this. The ones in the DC metro area have very catchy commercials though.
@Steve Laser: I forgot to mention that on the off chance a car is sold for more than the customer owes, that money must be refunded to the customer. So if this truck actually sold for its book value of $13,000, and the customer owed $2000, then they would be sent a check for $11,000. However, don't forget to add the past due interest, repossession fee, storage fee, transportation fee and auction fee. And you must take into account the fact that there is no way the car sold for book value. Buyers at auction houses will see the car was repossessed from a title lender and will offer far less.
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RTFA. \"If the customer pays the debt and the hefty interest charges on time, he gets the item back.
If not, the broker keeps it and all the profits from selling it.\"
Regardless of how it works in Illinois, this article explained how it works in Georgia.
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If you need $2,000 that bad, sell your DVD playing, seat heating car and get a cheaper one...
@masonreloaded: But, but that would mean I'm not manly! I won't have a trucker's truck for truckers!
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Bet he is wishing he went to his dad for a loan now...
My wife (before we were married), did something similar. She missed a payment on her Ford Focus (for like the 3rd time..not in a row), and they repossessed it. She only owed like $1200 on it, and it had like 50k miles on it. However, she would need like 2k to get the car back (fees, towing, interest, balance, etc). She let it go off to auction, and had to PAY like $200 difference in the value of the car.
Her credit was bad, and she went to JD Byrider for a car. She got a 2002 Neon with 100k on it for 6k. I thought \"Hmm not too bad\". She neglected to tell me the interest rate though. Turns out she will have paid almost 12,000 over 3 years for a car that will be worth about 2,000, and have about 120k miles on it...bet she wishes she had made that Focus payment on-time, and saved 10,000.
![\"user-pic\"](\"/mt-static/support/assets_c/userpics/userpic-159178-100x100.png\")
@Saboth: If your credit is even so-so, bail your wife out. I did it when we got married. She had credit cards charging her over 20% interest. I had really low balance transfer offers...
@Saboth: a neon with 100k on it for 6k? Even without the interest rate she got ripped off. Even though those were probably high way miles I can't imagine a neon lasting more than 120k. I had a neon for a couple of years and was lucky to get 2k for it.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-188304-100x100.png\")
@snowburnt: Neon are known to die around 130k miles due to head gasket failure...whoops! By that time a new engine is worth more than the car with a new engine in it.
Well, how would you like someone to borrow $2000 from you, and keep telling you \"tomorrow\"? It this acceptable for business or you wish them to run into the same situation as you are right now, when people do not pay you? What a bunch of irresponsible babies waiting for social government bailouts - take a government job if you do not know how to run your business, and do not complain about risk you took, idiot!
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-345033-100x100.png\")
@SurotamaCabango: If someone did that to me, I'd repossess their car, sell it, take my $2k, plus some generous service and handling fees. However, I wouldn't sell it and take the full value of the vehicle. But of course, I don't run a scam business.
@Steve Lasser:
In the article it says that Georgia is one of two states where the loan is considered a \"Pawn\" and that they can Keep the extra money earned from the sale.
So They are more likely to repo the car since they would get a higher payout even with lower the book resale.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-460794-100x100.png\")
Sounds like he should have taken that loan from his dad...
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-762471-100x100.png\")
Truly a sad story.
\"State Rep. Rich Golick (R-Smyrna) plans to introduce a bill this week to require title pawnbrokers to return any proceeds in excess of the principal, interest and fees on a loan.
Golick, a veteran legislator, said he believes in the free market and has no interest in driving title lending out of Georgia -- especially in times when many Georgians have few options.
But he's strongly opposed to allowing lenders to keep excess proceeds.\"
So the problem isn't the criminal usury that these guys ask for, nor is it the unreasonable power they have to immediately take ownership of the title when the contract is breached, it's the \"excessive proceeds\" they get selling the title.
These southern republicans are so ass backwards that they see no problem with 300% APR. The hand of the free market must be protected, even when it is soaked in the blood of the people you supposedly represent.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-159929-100x100.png\")
@chris_l:
Given the fact that the original article states that there are 18 states that allow title loans, it's not just \"backwards southern Republicans\" who think they are acceptable.
And what the state rep is opposing when he talks about \"excess proceeds\" IS the fact that the title loan company can repo the car and keep the excess between the amount owed and the sale price of the car - which evidently only Georgia and one other state find OK.
@chris_l:
Oops, my math was bad. It's 25% for 3 months, 12.5% after that. So annually, it's 187.5%. Woopee!
Still doesn't change fact you're having titles taken that are disproportionately larger than the loan itself. Since these ignorant \"free market even if it ends in federal, state, local, and individual bankruptcy\" republicans won't outright ban these businesses, how about only having the ability to repo is the loan is 25% or more than the title? I wouldn't have too much of a problem is someone is $5,000 behind on a $20,000 car.
Bad idea to begin with.
In states other than Georgia and Alabama the loan companies claim they need such crazy high rates to offset the people who get a title loan against a P.O.S. car for more than the car is really worth and bail on the repayment, sticking them with a junker.
Still, missing the 1st payment? W.T.F.? With loan terms that horrible, you might as well ask for $2500 and then make the 1st payment right then so you'd have 2 months to scrounge up the rest.
I think a lot of people go to these places thinking that they can not get a loan elsewhere. They never even check with their bank or credit union and that's a shame.
A bad situation, but it is funny how he suddenly had the money to pay when backed into his last corner. Not all the blame goes to the predatory lender. This guys sounds like he was pushing them as far as he could and he got burned.
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I understand perfectly what this guy was going through that made him seek out the title loan. My family's company does custom cabinetry, and builders and banks have been coming up with every excuse you could imagine not to pay on time. They've even done things that would technically be breaking the contract but know that nobody can afford right now to do anything about it.
In the construction industry, the subs need the builders and banks for business, but also need to get paid for the work they do. It's quite sad, they're between a rock and a hard place because there is really nothing they can do. If they give up and go looking for other work they may not find anything, and if they take it up a notch and work harder they may never get paid for it. Traditional work ethic really doesn't guarantee you anything in this situation and instead you are forced to hope the power brokers involved get their acts together. It's definitely easy to get depressed over the whole mess.
I feel bad for the guy, but he had to have seen this coming, especially with 2 late payments. I'm all for solving the problem on your own, but if he could have gotten help from his father, then that's where he should have gone.
I feel bad for Title Loans. Now they have to get rid of a 5 year old gas-guzzler. They are the real victims of this deadbeat who knew the conditions of the loan when he said \"I knew how expensive it was going to be,\" he said, \"and I weighed all that in my head without thinking of a repo.\"
congrats on being an idiot!
seems like selling the gigantic hog of a car and getting something reasonable should have been the first step, eh?
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I feel bad for this guy, but I really feel bad for his wife, who just lost her car. And these kinds of loans are ridiculous-if it can be treated like something as a pawn, then the company would seem to have every incentive to lie to you and tell you you can pay later, then come get your car on Monday.
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\"These southern republicans are so ass backwards that they see no problem with [187.5]% APR. The hand of the free market must be protected, even when it is soaked in the blood of the people you supposedly represent\"
The trouble with restricting the APR on these types of loans is that they are intended to be for short periods, measured in weeks not months...
If you're a customer of these places and you're borrowing for longer then a month then you have a serious issue w/ your finances and this is not the lending vehicle you should be using!
If these places were only allowed to operate with a max of say 35% APR, then a $2000 loan paid back over 6 weeks would gross them about $87, probably not nearly enough to handle all the defaults they're going to get just like the borrower featured in this article.
If your average bank saw defaults as high as these places then they'd be charging you 50% APR too.
So if you want the government to enact laws to protect people from themselves, then at least they should consider a tiered interest rate system--you can charge the exorbitant interest for the first 8 weeks, then after the loan must revert back to a lower \"long term\" type APR like 30%.
Otherwise we'll see these lending vehicles dry up completely as they become completely unprofitable, at which point people like the borrower in the article will be completely screwed as we must assume that if you're willing to pay thru the nose you have no other options available.
reminds me of when i went to a pawn shop like a year and a half ago for a firearms transfer for one I bought off of gunbroker.com. The shop was in the hood. It took a little bit to process the paperwork and such, and there was a bunch of lower income class people coming in and doing title loans on their cars. I couldn't help but think what idiots they were.
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I love it when people borrow money so that they don't have to give up their lifestyle or expensive cars in the hopes that some sort of settlement or payment in the future. The article states that people lost their $10-15k Mercedes or Expeditions when all they have to do is sell their car and downgrade to something more affordable. I can't help but feel sorry for the people but they should really face reality.
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The loans should be treated like a pawn. The pawn broker should keep the car. People would not put themselves in these positions if they had to walk. Title pawn sets up an out of site out of mind kind of mentality.
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The only thing he should have done is to incorporate his business (even as an LLC) and had a vehicle owned by the business. Business fails, and you don't lose your wife's car.
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I am a little ticked with all the blame-the-victim going on here.
Was this stupid? Yeah. And if he signed a contract he owed the 300% interest.
But... that's enough of a penalty without losing the car and not recouping the difference.
If Tony Soprano made this loan and sent Furio to take his car on such a short timetable, a crime would have been committed. Why is it legal for a Title Loan company?
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You read a contract, signed it, and failed to follow the letter of the contract and lost. Sound's perfectly reasonable to me...
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Man I remember when these were in vogue here in FL a few years back. I used to hear SO many radio and TV ads for them. A lot were rent to buy wheel stores so you could borrow against your own car for new rims!! I'm so glad they got the chop here.
Speaking here as a lawyer - while I agree that everybody should read and understand the fine print on a contract, I think y'all are forgetting that print is \"fine\" for a reason. So many contracts are deliberately written in a vague, misleading manner, with important points hidden in legalese. People think they understand the contract, even though they don't. People think the guy on the other side of the table is reasonable, although he's a predator. They're also rarely reading these things in a leisurely fashion, with plenty of time to think over exactly what the contract says and what that might mean. They also, very frequently, don't understand that the people they're contracting with will lie to them about what the contract means or whether certain provisions will be enforced.
And mostly the people who expect you to sign things don't expect you to read them. I wish I had a buck for every time I've been handed a form to sign that says \"I have read and agreed to [document]\" and then had to ASK FOR a copy of [document], because of course I was never given a copy. Naturally, they are surprised because nobody ever asks and they don't give a shit if you read it or not.
So I can't come down too hard on economically desperate people who don't run out and get their personal family lawyer to translate the 4-point type in subparagraph 4(a)(34)(iii) on page 32 before they sign.
I am going to blame the poster.
His idea was to go from worst -title loan- to best -loan from dad-.
He should have offered his father a reasonable interest rate 1%/month and even an exorbitant rate 3%/month or even a percentage of the money the OP was owed.
Always talk these kinds of things through with people.
If you have other sources use them first -family, friends-
Always understand what can happen.
ASK THE PROVIDER \"WHAT IS THE WORST THAT CAN HAPPEN\" AND HAVE THEM WRITE IT ON THE CONTRACT.
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He would have been much better served by selling the wife's Expedition for $10k to $11k and then replacing it with a beater for like 1 or 2 thousand. If he was driving an equally new vehicle that would fetch a good price on the market then he should do the same with his.
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With interest rates like that, you're better off with a loan shark. If you're late with a payment you might get beat up but at least your car won't get stolen.
So he made the first payment late and short. And then he let them know he would be late on the second payment...
I fee sorry for the guy but wow. I don't think he was thinking very clearly. Why didn't he ask dad for the loan in the first place? No interest and no repo...
unfortunately, the guy thought he could make this loan work for him and it backfired. I've been pretty broke in my life, but never bad enough to go to one of these places. If this was 50 years ago, he wouldn't have lost a car....more like a limb or at least a couple of fingers. 21st century loan sharks!
He lost.
That is sad - It seems like that title loan thing was their only option. They should never have allowed themselves to get into a position where that was their only option. What is wrong with staying out of debt and/or having some money in the bank so that it is not a disaster if a job is lost or an employer ends up not paying? Are they victims - yes, but it is their fault that things ever reached the point where they had to go to a business that everyone knows must be shady and a rip off.
This \"TITLE LOANS\" place is located about 100 yards from my property, and their oversized neon sign often has technical problems causing their sign to display \"TIT LOANS\" -- which has an entirely different connotation! I'd be happy if we get rid of title pawns in Georgia, if only so that I don't have to suffer the blood-red glow of their energy-sucking signage (yes, I bought the property before the title loans place was built).
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I lived in Athens, GA for 8 years. Good times. Bad times. More good than bad. It was a fun town and I was in my 20's.
My mother was dying with cancer. My old man had already died. I needed money to help take care of my mom. I saw an ad for title loan.
I decided to check it out. Two middle aged ruffians who looked like they slept in their clothes were in the room. One behind a huge, massive oak \"captain of industry\" desk and the other sitting on the side of the desk like a acolyte.
I had a Subaru Justy 4x4. When they told me the ins and outs of how the system worked, I said \"thanks\" and made for the door. It was obviously a scam, plain and simple.
In the end, it all worked out. I got 270,000 miles out of the Justy. Sold it to a girl who drove it from Asheville NC to Big Sur, CA and it's still on the road.
Yes, a sad story but telling about how relationships exist between the government and its citizens. This is part the price we pay for \"unbridled\" capitalism. The only way it will chance is when state and local governments take positive action to make predatory businesses illegal. I'm curious about how AL and GA justifies allowing this kind of activity. Twist of the tongue techniques like classifying Title Loans as pawns just isn't cutting it. In this case it's like literally pouring salt into a wound. I'm just as disappointed that people will fall for risky deals like this.
Government at all levels has let the banks do as they please for a whole decade: inflate housing prices, defraud homeowners—you name it, it was kosher. But god forbid I might need to take a loan out against my car, to pay for my rent or my heating oil. But they spring right into action regulating us, the consumer. I have never been so ashamed to pay my taxes.
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These types of \"loans\" have always seemed sketchy to me. Even when I was in a very dire financial situation, I never even considered this kind of place. Seemed like I would lose more than I gained.
Maybe GA and AL will get their act together and ban these types of businesses.
@Jubilance22: Regulation isn't exactly southern states' strong point. And these things bring in loads of money to the local city councils -- why close them?
@Jubilance22: Maybe GA and AL will get their act together and ban these types of businesses.
ha! one of the more bigger pipe dreams I've heard so far this year.
Thankfully GA banned payday advance loans. Instead of 7-11's on every corner, we have title pawns on every corner.