DUVAL COUNTY, Fla. — Families struggling to pay bills are signing up for quick cash loans and ending up trapped in a cycle of debt.
Cassandra and Tyrone Stewart know what it's like to struggle.
"We needed the money because I was going through a job layoff," Tyrone Stewart said.
The couple told Action News that they took out a $1,000 loan from InstaLoan on Atlantic Boulevard, using their truck title as collateral.
More than a year later, the Stewarts say they've paid back almost double the original amount and they still have one more payment to go.
"You say I know you paid this much off," Cassandra Stewart said. "And you go and see, and we still have $600 more to pay? It's confusing and frustrating."
Florida law caps the interest rate that title loan companies can charge to 30 percent, but the industry has found a way around that.
"This voluntary insurance is not voluntary," Lynn Drysdale said.
Drysdale is a consumer lawyer at Jacksonville Area Legal Aid. She's represented countless people who have lost everything trying to pay back title loans.
"They're using the Small Loan Act, which allows for the same interest rate but also allows lenders to charge for insurance and other products," Drysdale said.
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It's those so-called products that add up. On lines 12 and 13 of an InstaLoan contract, you'll find non-filing insurance and voluntary auto insurance. Drysdale said both protect only the company and not the borrower.
On an Express Loan contract for a $500 loan, the collateral damage waiver fee is $299, more than half the loan amount. When you add all the fees to the 30 percent interest rate, you could end up paying double what was borrowed.
Consumer advocates told Action News that these title loans renew each month, which means that you're stuck paying the fees and credit checks again and again. When you can't make the payments, the company can repossess your car.
Action News' Paige Kelton went to both of Jacksonville's InstaLoan offices to get answers. However, workers referred her to their corporate office. Repeated phone calls were not returned.
Using the Freedom of Information Act, Kelton found dozens of complaints against title loan companies filed with the Florida Department of Financial Regulation. In one letter, an older Jacksonville woman paid $957 on a $500 loan and still hasn't made a dent in the principal.
The letter asks the state agency, "How can you allow us to be taken advantage of by these companies?"
Kelton took the complaints to State Sen. Audrey Gibson.
"It's frustrating because it's preying on people who are just trying to find a way to make ends meet," Gibson said.
Gibson told Action News that she had no idea so many families were struggling to pay off title loans.
"I'm asking our chair of banking and insurance in the Senate to look at this and see how can we fix it," Gibson said.
Consumer advocates say one alternative to title loans is borrowing what you need using your credit card, which is cheaper than getting one of these loans. That way, you're not in danger of losing the thing that gets you to and from work.
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