WEST WARWICK, RI (WPRI) – Many people desperate for cash use their car as collateral for a loan, but Target 12 has learned that these high-risk swaps can leave borrowers on the hook for more than they can afford. they had negotiated.
Often, borrowers have poor credit and possess little of value besides their car. Loan companies promise quick money, but in the end, many of their customers lose everything.
Target 12 spoke with the owner of a repossession company, who said he repossessed up to 25 cars a month from just one car title lending company. He didn’t want to reveal his identity, but he was kind enough to tell us about one of his biggest clients.
Autoloans LLC a company that has many addresses. On one of their loan deals, we found them listed in Boca Raton, Florida. On court documents, we found them listed in Las Vegas. But the contract also states that they follow the laws of the Cook Islands in New Zealand.
“I’m sleeping, my son wakes me up, mom, they’re towing your car!” recalled Dena Mageira of West Warwick, who recently got her car back.
Autoloans LLC is a company that Mageira knows very well. Her car was one of many seized when a family emergency left her in desperate need of a loan.
“I was very frustrated because no bank approved me. So I went online and looked for title loans,” she explained.
Mageira says Autloans LLC promised quick cash from his car.
“I just filled out the application, phoned a girl and she said I was approved instantly,” Mageira said.
According to the Federal Deposit Insurance Corporation, more than 1.1 million households in the United States used car title loans in 2013. With these loans, also known as title pawns, the lender retains title to the vehicle. It’s a fairly standard arrangement until you see the interest rates involved.
Mageira’s loan carried an annual interest rate of 219%. That means for a $2,400 loan, she would have to pay back more than $7,000 – a price she says she was never told about.
Mageira said she was told the loan came with an 18% annual interest rate and told Target 12 that it wasn’t until weeks later when she finally received her paperwork. by mail, that she realized how much it would cost.
“That’s when I called them and told them that was not what I was told.”
Target 12 has contacted the Federal Trade Commission, which warns that these loans are “high risk” and may be “misleading” and warns customers to “consider other options.” We also reached out to rep Joseph Almeida, who was very candid about high interest loans.
“Terrible legalized theft, what they do to people on these securities loans,” he said.
Representative Almeida is drafting a bill that would limit the amount of interest companies can charge.
“I’m still doing my homework so I can write a proper bill on this.”
Mageira hired a lawyer and was able to get his car back by order of a judge. She is now trying to prove that the loan contract is illegal.
Target 12 contacted Autoloans LLC. We left many messages in their offices in Florida and Las Vegas. According to the Better Business Bureau, the company has an “F” rating for not responding to customer complaints.