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Aarian Dodson took out a $300 car-title loan in April to buy food. She wound up losing her car and borrowing nearly $700 to get it back.
Aarian Dodson gets her daughter, Jaclin, ready for day care before heading to work. |
BY CATHY JETT
Aarian Dodson thought a $300 car-title loan would tide her family over until her husband's disability benefits kicked in.
Instead, the Spotsylvania County former stay-at-home mother of two said she feels like it has her drowning even deeper in debt.
Since Dodson got the money to buy groceries last April from Loan Max's office at 334 Amaret St. in Fredericksburg, she's had to shell out a nonrefundable $65 annual membership fee, a $6 fee to record the lien on her 1997 Buick Century and borrow nearly $700 from a relative to get her car back after it was repossessed.
"If I had known I would have went through this, I would have taken my TV set to the pawn shop," said a frustrated Dodson, who had to borrow an additional $70 from a friend for a taxi so she could retrieve the family's only vehicle.
She still owes Loan Max $370 and plans to fire off a complaint to the State Corporation Commission's Bureau of Financial Institutions about the company's triple-digit interest rates and numerous fees. It will be the 20th such complaint the bureau has received about vehicle-title loan companies this year.
According to a Center for Responsible Lending report, vehicle-title loan companies not only trap borrowers in a cycle of debt but can take away an essential asset for most working families if they can't make payments.
These companies operate by getting borrowers to put up their fully paid-for cars or trucks as security for what are marketed as small emergency loans. In Dodson's case, she also had to hand over a duplicate set of keys to the Buick.
A typical loan has a three-digit annual interest rate and is made for much less than the value of the car. Dodson's loan states at the top that she'll be charged an annual percentage rate of 300 percent. For her, that came out to $73.97 in interest per month.
"If I just paid the $71 minimum, I'd be $3 behind," said Dodson, who got a job as a waitress at Logan's Roadhouse restaurant to help pay off the loan and make ends meet while her husband recuperates from a hernia operation.
"Even when I went in to make more than my payment, they said I had to pay cash; they wouldn't take a debit card," she said. "It was like they were against that to keep you in debt."
Dodson, in fact, had to take out another cash advance, which included a finance fee equaling 25 percent of her advance.
If a borrower can't repay a loan, a vehicle-title loan company can take the vehicle and sell it--and is under no obligation to return any difference, according to the Center for Responsible Lending.
Dodson said that when her Buick was repossessed, she was told that she would have to pay more than $900 to get it back and finish paying off her loan. She said the Blue Book value of the car was more than that, so she told the company to keep it and call things even.
"They said they'd auction it off and would keep the difference," she said. "If they got less than what I owed, I'd owe them the difference."
Dodson later learned that she could get her car back for $587, but it would be auctioned off unless she came up with the money in two weeks. She thought that meant she'd also get the title back, so she borrowed the cash from a relative, hired the taxi and went to Loan Max.
"The car was worth about $1,000," she said. "It was worth it to me."
There, she discovered to her dismay that the $587 just covered a $400 fee for having her car towed, a $100 storage fee to Fredericksburg Auto Auction even though she said she got there before the car arrived, and a $187 unexplained payment to Loan Max.
"I still don't understand why they charged me $187 if I was only $97 behind," Dodson said. "Why $187? It would have been $20 for late payment. I don't know where they got that figure from because they didn't give me a receipt."
Cathy Jett: 540/374-5407
Email: cjett@freelancestar.com
