KISSIMMEE, Fla. - Action 9 investigated a high-interest car title loan that could wreck borrowers' finances and that Florida banned years ago.
Action 9's Todd Ulrich exposed how new lenders have used loopholes to bypass the ban, trapping Central Florida families with payments they can't afford.
Dan Pagan was unemployed and desperate to pay rent when he found an online car title loan offer. He sent the title for his Toyota vehicle to Marlin Financial for a $2,000 loan.
"It took about 3 hours then the money was wired right away," he said.
Pagan said he expected a late fee when he missed his first payment of $300, but instead, his car disappeared.
"I panicked," he said. "I freaked out. I wanted to know where my car was."
A repo company snatched it, triggering a buyback clause. Pagan was told it would cost him almost $7,000 to recover his car.
"I almost cried in tears and asked, 'How much again?'" he said.
Consumer groups argue that title loans hit customers with abusive repos and punishing fees.
The state legislature banned high-interest rates on car title loans 17 years ago. Many lenders left the state because the law capped rates at 30 percent. Some companies have returned and are using loopholes to sell title loans.
Sandra Arce borrowed $1,800 loan against her car title from InstaLoan. Repaying the loan over three years cost her more than $7,000.
"They just took advantage of me. That’s all they did," Arce said. "And that's not right. That is not right."
The interest rate in her contract appears low, but additional insurance fees cost her more than $200 each month.
"They never (explained) anything to me," Arce said.
Ulrich traveled to Instaloan's Kissimmee location for answers.
"I've got questions about the insurance fees. Is that fair?" Ulrich said.
"No, and you have to get out,” a manager said.
Consumer advocates said the extra fees balloon interest rates to 140 percent or more.
Orange County Public Schools Chairman Bill Sublette, who was previously a state representative, led efforts to ban high-interest title loans in 2000.
"They get ahold of you then just don't let you go," he said.
Ulrich asked Sublette about the loopholes that lenders now use.
"I would ask (the) state attorney general to take a hard look at these issues you pointed out in your investigation," Sublette said.
Pagan said his car was sold at auction this week and he lost thousands.
"What they do to people, it really hurts," Pagan said.
Marlin Financial and Instaloan didn't respond to Action 9's request for comment.
The Consumer Finance Protection Bureau in 2016 fined TMX Finance, Instaloan's parent company, $9 million for misleading customers about loan fees.
The CFPB ordered the company to stop its unlawful practices.
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