The Truth About Title Loans and My Personal Story
In August of 2006, I needed money for school supplies and clothes for my two children but I was really short on money. I had a garnishment for medical bills coming out of my paycheck and I didn't know where I was going to come up with money for their school.
I had seen the commercials for LoanMax, and it sounded like a way to solve the current situation I was in. I debated about it for awhile, then I started reasoning with myself as to how the loan could work.
I told myself, I work for a doctor's office and I make $10 per hour...that's not becoming rich, but I should be able to survive. With the garnishment I was only left with barely enough for my basic living expenses: rent, electric, water, food, and gas to get to and from work. School was coming up quick and the garnishment wouldn't end until November. The children needed clothes and school supplies, and they were in high school. That meant an additional expense of a laptop, which is where most of their work would be done. The school had a good deal on that since it would only be $80 per child, but to come up with $160 was going to be impossible. I didn't qualify for any assistance because they counted my entire pay even though 25% of it was being taken to pay the hospital. I had already cut expenses everywhere I could. I was spending only $50 per week on groceries for a family of four, including personal hygiene and cleaning supplies. Even that was not enough, since I still couldn't come up with the money.
Then I thought, well, the garnishment ends in November. If I get the loan, I can pay it off in November when the garnishment ends—so that is what I did. I went to LoanMax and got a loan for $600. The blue book value of my car was $1200.
In September I made my first payment of $150 with the money I kept from the original loan. At the end of September, two unexpected things happened to me. The first was I ended up in the hospital for four days with a kidney infection and gall bladder problems. The second thing was I learned that there was a new garnishment starting from Carilion Medical.
So in November, when the first garnishment would have ended, a new one would start. Now how was I going to pay the loan and save my car? I realized I had no choice—I was going to have to file bankruptcy. I learned that I could recover the money from my first garnishment, which was approximately $1100. Even though I couldn't get it until December, it should have been enough to save the car.
I missed my October payment, so on November 10 I got a call from Jennifer at LoanMax. She wanted a payment of $231 so I explained the situation to her. She said my balance was at $831 and she had to have a payment by the next day. I told her I didn't get paid until next week. She reiterated that I had until tomorrow or they would have to take the car. Sure enough, on November 16 they took the car. I called her and asked what I would have to do to get the car back before they sold it. She told me to come up with $831 by the end of the week. "So," I said, "the only way is to pay it off?" She said no, it wouldn't be paid off—in order to pay it off I would need $1817. How could a balance that last week was $831 now be almost $1000 more? I knew then that there was no way to get my car back. I had only paid $1500 for the car in the first place.
I was so furious. Yes, I did get the loan and I was responsible for it. However, my loan was only $600 and I had paid $150 of it back, leaving my balance before interest at $450. They had added so much interest and so many fees that I could never get it paid off. How can that be legal?
I have a warning to all others: if you're going to a car title loan place, be aware that you are actually selling the car. If you are willing to sell your car, then you should sell it yourself and get close to the actual value of it back.
These title loan companies prey on the misfortune of others because they know these people will probably not be able to pay the loan. Even if the loan was at a reasonable interest rate, it would be a high risk. Unless there is going to be a positive financial change in the near future, they are not going to be able to pay a loan.
How would a company know this, you ask? Common sense. Who would risk the title to their car (probably the only thing of value they have, and their only transportation) except the desperate? They make it sound like they are helping with the misfortunes of life, but actually they are making a fortune off of them. 300% interest for a person with a good income could break a person, much less a person who is already in a financial bind.