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We took out the loan 4 yrs ago for $1500 & now, 4 yrs later, we've paid about $9000 in interest!! Is there a way we can offer a settlement? The car is only worth about $700 due to dings that's happened over the last couple of years. Should we stop making payments for a short period (like 30 to 90 days) before offering a settlement or just go ahead & offer one without stopping payments? All of our payments have been up to date with the exception of a couple times each year where we've had to push them for a week or two. Should we offer the $700 the car is worth or higher? Right now it's saying we owe $1690 since we've always just paid interest because that's all we could afford.
We live in Oneonta, AL & we use Easy Money
All this and you want help from an Internet forum? I mean, really?
No one here can help you, get some professional assistance. You have so many resources available a line could form with those willing to help.
Agreed. Paying $9k over 4 years (48 months) works out to $187.50 for a monthly payment which they claim is all interest. On an annual basis, that's $2250, or about 150% APR.
thats the problem with borrowing money from any of these types of places. they will loan you the money, but they are allowed to charge massive amounts of interest because usury laws have by and large been abolished.
- Why did you let a title lease balloon up to $9K of interest alone .....
Title loans are like that. Just another form of payday loans. Unless you can take care of the whole thing immediately it becomes a living thing and it eats your paycheck. Bankruptcy is often the only way out.
If you go without making a payment for a while, they probably will offer you a settlement. It will obviously hurt your credit, but I'm guessing your credit is tough already. In the end it won't make that much difference. You've already paid so much in interest they probably are ecstatic.
I agree with the above advice to obtain a statement of account, showing everything charged and paid since origination. Then, you can audit the loan to determine the interest and fees. Fees drive up the value of the borrowed money, subject to additional interest, and help to create the ballooning of a small loan. Continue to pay on the loan while you investigate the account to determine if there have been any violations of the law, as failure to pay will result in repossession of the vehicle. Even if the finance company could sell the vehicle for $700, there will likely be allowed deductions for storage and auction fees, such that you may not get much applied to the loan, and still be without the vehicle, potentially owing the difference between the recovery and the balance, as that can be written into contracts in some states.
300% interest plus fees is not uncommon, when title loans are examined in terms of annual percentage rates. It's morally usurious, even when dealing with elevated risk borrowers who may have bad, little, or no credit, but not illegal, despite attempts by consumer protection advocates to reign in the abuses in the industry. The mechanism many companies use to circumvent banking regulations is to make the loans open-ended. Fixed-rate loans would be subject to regulatory oversight by the banking authorities, including definition of criminal usury. Small dollar lenders, however, are not subject to criminal usury laws in many jurisdictions, which is how the fees and interest are at such high APR.
Do you have a local credit union where you could apply for a personal loan? If you can obtain a reasonable term loan to immediately pay this company in full, that would allow you to proceed with a guaranteed repayment schedule, one that you could accelerate based upon budgetary constraints, though given the money you have paid so far, you would pay the $1690 much faster with a traditional loan. Even a credit card, as recommended above, could be a last resort loan that is subject to regulatory oversight, and while the money is expensive, it's certainly much less expensive than the current title loan situation.
With respect to a negotiated settlement, I don't see how you could even broach the offer of a settlement in full because the debt does not function in the same manner as a regulated loan from a banking institution, where you have an origination date and ending date, with equal monthly payments, or monthly payments plus balloon if allowed by law. In a traditional loan, if you are unable to pay, you can ask for a loan modification, or settlement in full, which can apply to many different types of financial products. With the finance company, what you owe them this week or month is the outstanding debt, not what has been paid to date because each month is a different transaction, with likely an additional fee tacked on to the outstanding debt that is rolled over, which is how the open-ended agreements end up costing so much over the life of the debt, until it is paid in full, hence the snowball.
I believe Alabama is one state that requires payday lenders to allow you to pay in fixed monthly payments if requested for a payday loan, but I do not know if that applies to the title loan finance company as well. I would call the state banking department, and/or the state attorney general to see if you can request modification of the title loan to a fixed-rate loan. If that can be accomplished with the finance company, that would stop the snowball of fees and interest charged on the outstanding debt.
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All the world's a stage, and all the men and women merely players: they have their exits and their entrances; and one man in his time plays many parts, his acts being seven ages.
~William Shakespeare (As You Like It Act II, Scene VII)
@duster: this is a real post. And after reading these responses I guess our best bet would be to keep paying the monthly payments but also try to find some money to set aside each paycheck (cutting whatever we can) and pay off the $1690. Thanks guys for answering!
I want to point out that I wasn't skeptical of the circumstances as I know plenty of people who have fallen into this trap, including a few that I've bailed out by buying their vehicles to pay off the loan. I've never seen one drug out this long, the longest I remember was a guy who rolled one for a year and a half to the tune of $3000 on a $750 note. I was mainly just skeptical because it was a first post.
Obviously it's in your best interests to pay it off in order to preserve your credit and keep your car. But just remember, you've already spent $9000 to keep a $700 car. Nothing about that makes sense. And if the fact that you haven't put anything toward the principal in four years is an indication of your overall financial situation I really doubt that you'rer about to buy a house or anything like htat, so keeping your credit report pretty is a secondary issue.
If you can tighten the belt, cut your expenses to the bone, and maybe pick up sopme extra income to get this thing knocked out in a couple of months, that would probably be your best bet. If not, you may be able to find a credit union who will loan you the money to pay this off at a reasonable rate. And as someone else said, even paying it off with a credit card at 20% is better than what you're paying now.
Whichever way you go, getting this monkey off your back needs to be a high priority.
OP is definitely real, and her situation is all too common. OP needs to be throwing everything she has at this loan, except shelter/lights/food money. It is that serious. These title loans are legal but when you look at them, they are usurious on annual basis; but they're made on a monthly basis with the stated intent that you pay them off shortly. You can offer a settlement, but why would they let their cow stop giving milk? You've been paying all this time. Unfortunately, if you stop paying, they'll come for the car.
yes it is, LEGAL loan sharking. usury laws have pretty much been abolished in this country with the rise of payday loan shops across the country. they are allowed to charge the hefty interest rates by the way they write the contracts.
For the future, READ the fine print on anything you sign (all of it) and DO THE MATH on the payments / interest. These people are not your friends. They want to take your money - just sign here...
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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I don't know how your credit is, but if decent you can get an unsecured loan at a credit union at a low rate and pay off the balance if you can't afford to just pay it off from savings. Too bad you didn't refinance it long ago. That's an astronomical amount to be paying for a car loan.
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