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12 OYS: Payday loan users caught in vicious quick-cash, high interest cycle

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Americans for Financial Reform report

News 12 at 6 o’clock / Friday, Dec. 19, 2014

AUGUSTA, Ga. (WRDW) — Some folks rely on payday and title loans to get from one paycheck to the next.

For Christene McCullough, taking out a title loan has been one big nightmare.

“Some nights I lay there and I cry,” said McCullough. “It’s gotten to the point where it’s hard to pay it (loan) because bus transfers are like $50 a month.”

In June, after her SUV broke down, McCullough borrowed $1,500 from TitleMax to get the vehicle fixed. It is still in the shop.

So, now she borrows a friends car which helps. But being on disability and raising two children, she does not have the money to make her $220 a month payment to TitleMax, because she said the interest is too high.

“You’re paying like $189 in interest and whatever else you pay over, that’s what goes to the loan,” McCullough said.

“I will never do that again,” Darrell Mayfield said.

He took out a $400 payday loan during Christmas several years ago.

“It was a necessity. I needed the money,” McCullough said.

But he too ran into some hardship.

“I called and let them know that I was going to give them the money the next day,” McCullough said.

Which he said led to dozens of harassing phone calls and even worse.

“Once you miss a payment, the interest level just skyrockets,” McCullough said. To as much as 500 percent.

According to a new report by non profit Americans for Reform, the “debt trap is an essential element of the quick-fix lending industry, and with its “extremely high fees, many people end up paying far more in loan charges than they originally borrowed; and because of strong arm collection tactics, payments to these predatory lenders often take priority over rent, utilities and other necessities.”

“The ability to pay is difficult so they get caught in that thing of trying to pay them back,” Mayfield said.

The industry has spent millions on lobbying and campaign contributions to 50 members of congress, in what AFR calls an effort to “line the pockets of powerful Washington politicians.”

Meanwhile McCullough says she has learned an expensive lesson. “If you are trying to get a loan from a loan place, don’t do it, said McCullough.

We called and or emailed TitleMax, Advance America and several other title pawn and payday lenders, but have not heard back from any of them yet.

Americans for Financial Reform report.

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12 OYS: Payday loan users caught in vicious quick-cash, high interest cycle

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