Quick Cash — At A High Price

You Can Lose Your Vehicle If You Can't Repay Short-Term, High-Interest Car-Title Loans

(CBS)  Home-care provider Felicia Scrubb was way behind on her bills. But the emergency loan that was supposed to bail her out became her real crisis, CBS News correspondent Mark Strassmann reports.

"I was raising three kids by myself. I didn't want to be homeless," Scrubb says.

She borrowed $450 from a so-called car title lender. It's a short-term, high-interest loan. Borrowers use a car they own as collateral.

The lender keeps your car's title, and sometimes, copies of its keys. If you fall behind on payments — an issue for many borrowers — you could lose your car, which is often worth much more than the amount borrowed.

Scrubb could barely pay the extraordinary 25 percent monthly interest, never mind repaying the $450 she had borrowed.

Five months after she took out her loan on Christmas Eve 2004, her car was repossessed.

"I mean, I was like, how am I going to get to work? How am I going to pay my bills? It was terrible," Scrubb says.

Her lesson learned?

"Just read the fine print," Scrubb says, noting "it was the interest" that got her.

Only 14 states allow car-title loans. Most states say they violate usury laws. The industry argues these loans help people who can't qualify for financing elsewhere.

Scrubb recently got a new car, but says the only one helped by her original loan was her lender.

[karlap1883]

Annd2302 is obviously a SNOT! I am well educated and a marketing professsional. I have raised 3 children as a single parent. I have sometimes felt like having a pity party (and probably did have a few). I do know what it is like to be in deep despair. These are the times a person would turn to a rip-off company. Empathy is the word SNOT needs to learn.
You should not judge people unless you have walked a mile in their shoes.

[karlap1883]

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[karlap1883]

What a SNOT ann2302 is! Obviously, she has NO idea what it is like to be in a situation like the woman this article was written about. I am well educated and a marketing professional. I have raised three children on my own. I DID not need or have a pity party. There were times I struggled awfully. Sometimes circumstances get in the way of good choices. I made a choice to go to one of these rather than lose my house. Yes, I almost lost my car. Thank God I didn't. The reason this article BELONGS in the news is to educate those poor souls who have no idea what they are getting into when they visit a place like this. My advice is borrow from a friend and pray.

[samthetvcat]

It's 25% MONTHLY interest . . . it pointed out in the tv report that that's equal to 300% per annum. In contrast the average credit card only charges about 25% per annum. It's confusing terms like these that entice honest hard-working people into signing these despicable contracts. Maybe the new AG in NY will take this on as his new cause now that Spitzer's cleaned up Wall Street (sort of - lol).

[saltnpepper7]

I AM EXPERIENCING A SIMILAR SITUATION. I FINANCED A CAR BACK RIGHT AFTER 9/11. IT'S AN OLD 1998 MINIVAN AND BASICALLY I'VE PAID FOR IT TWICE OVER. YES, I HAD SOME LATE PAYMENTS: LIFE HAPPENED AND I FELL BEHIND A FEW TIMES. ON 12/13/06 THE COMPANY REPOSSED MY VEHICLE, EVEN THOUGH I ASSURED THEM THAT A CHECK WAS POSTED FOR $700 MORE THAN WHAT WAS OWED AT THE TIME. THEY CASHED THE CHECK THE FOLLOWING DAY, 12/14/06, AND WITH THAT I THOUGHT I COULD JUST PAY THE TOWING AND IMPOUND FEE AND GET MY VEHICLE BACK. THIS DID NOT HAPPEN. THE LOAN WOULD COME DUE 1/11/07 (ULITMATELY IT WOULD MEAN ONE MORE PAYMENT BEFORE THE VECHILCE IS RIGHTFULLY MINE) AND BECAUSE OF THIS THE COMPANY SAYS I WOULD NEED TO PAY THEM CLOSE TO $4,000 MORE IN ORDER TO GET MY VEHICLE BACK, $2,500 IS PRINCIPAL AND INTEREST ON THE LATE PAYMENTS. THEY SAY I ALSO HAVE ADDITIONAL LATE PAYMENTS OF $550. THIS IS OUTRAGEOUS. I WORK FOR NYC GOVERNMENT AND HAVE BEEN STRUGGLING TO MAINTAIN MY FAMILY. NOW I AM FORCED TO USE PUBLIC TRANSPORTATION AND AFTER 20 YEARS OF SERVICE TO THE CITY MY JOB IS IN JEOPARDY BECAUSE I AM UNABLE TO GET AROUND TO PERFORM MY DUTIES IN A TIMELY MANNER. THESE UNSCRUPULOUS, PREDATORY LENDERS SHOULD BE IMPRISONED AND FINED FOR TAKING ADVANTAGE OF THE WORKING POOR. TO ADD INSULT TO INJURY I WAS FORCED TO PAY $50 TO THE IMPOUND, JUST TO ENTER MY VEHICLE TO GET MY E-Z PASS TAG. AMERICANS ARE BEEN VICTIMIZED BY GREEDY, UNCARING PEOPLE AND IT'S A REAL SHAME.

[vcdb]

So iss this any different then what the credit card(banks)company does? Same rates, same outcome, just as legel. Wheres the outrage?

[samthetvcat]

You know what's the problem with placing the burden on people so desperate for $ that they'd probably sign the papers even if they had read the fine print which is probably about 50 pages long is that when you deprive the working poor who are already breaking their back trying to make ends meet of their only mode of transportation, at least some of them will end up needing assistence from the government. States did the math when it came to the similar situation of 'businesses' offering rent-to-own items and just waited for some excessively greedy creep to repossess the $300 from some poor grannie who was like 2 payments short of owning it outright after having already made $25000 in payments to clamp down on abusive terms. They ought to do the same with these types of loans.

Felicia ought to contact her attorney general and have them go over the contract - if they don't think they can win a suit brought on her behalf to void the contract on grounds of unconscionability then at least they'll be on the lookout for other cases of abuse (hopefully!)

[annd2302]

Mark Strassmann
What is the problem? Ms Scrubb, by her own words, %u201CJust read the fine print,%u201D is her own worst enemy. This loan business sounds like to me as a good ole American way to make some of the all-mighty dollar.

Having the children and the bills is no different than 99% of the American public. Almost everyone has some sort of financial responsibility, even if it is just a utility bill or monthly charitable contribution, it is still a responsibility, and we, or our accountants have to manage our money accordingly. I feel not a bit sorry for this lady, this is just life.

What does Christmas Eve have to do with this? Sounds like to me someone just needs to have her own pity party and get on about real living.

One more question, just what is a %u201CHome-care provider%u201D? Is she certified or uncertified? At this point just what difference does that even make?

Mark Strassmann, Why is this even a news worthy story???????????????