SCOTT SIMON, HOST:
Need money fast? Here's a not-so-good idea. Put up the title to your car in exchange for a loan, a very-high-interest loan of up to 300 percent. Michael Pope of member station WAMU introduces us to somebody who got a card title loan in Virginia, then found himself owing even more from a second loan he didn't even ask for.
MICHAEL POPE, BYLINE: For many people down on their luck and desperate to pay medical bills or make the rent, this is the sound of money.
(SOUNDBITE OF TITLEMAX AD)
UNIDENTIFIED ACTOR: (Singing) TitleMax got your money, your money, your money, your real money, ha-ha.
ACTOR: TitleMax can turn your title into real money.
POPE: That's the television commercial that was playing late at night that hooked Waverly. Like the dozen or so people we spoke with about their experience taking title loans, Waverly didn't want us to use his last name because he didn't want future employers to find out he took a loan he now says was predatory.
WAVERLY: They make it sounds so easy to get a loan and, you know, to come in and not having to go through the hoops, I guess, so to speak, to get, like, a traditional loan. So, you know, I decided to stop by one day to see when I didn't have any other options.
POPE: Waverly drove to this town TitleMax in Richmond and handed over the title to his 2000 Toyota Avalon in exchange for a $500 loan. Then, we returned a month later to make the first payment...
WAVERLY: I was offered additional money on that loan being that I had - was in good standing or something.
POPE: That additional money ended up being a totally different kind of loan, one that had much better terms for TitleMax.
WAVERLY: But it wasn't explained that it was, like, a consumer finance loan, which later I found out that was what I was in.
POPE: As it turns out, that consumer finance loan offered none of the protections created to help borrowers. There was no limit on the interest rate, and the lender could extend it indefinitely. Just as Waverly is explaining that to me, we're interrupted by a man who walks out of the TitleMax and tells us to leave.
POPE: What's your name?
UNIDENTIFIED MAN: I'm not giving you my name, but you need to leave the premises.
POPE: OK. All right, thanks.
A spokesman for TitleMax says it's the company's policy to avoid responding to inquiries from the media.
Do you feel like they were honest with you?
WAVERLY: No, I don't feel like they were honest, and I felt like I was manipulated.
POPE: What happened to Waverly shows the latest trend in car title lending, as these businesses increasingly move into the shadowy world of consumer finance loans. Because these are not technically car title loans, regulators are not tracking how many automobiles are being repossessed under these loans or how many people are missing monthly payments.
For NPR News, I'm Michael Pope.
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