Title, payday lenders are back
JACKSONVILLE, Florida – Ads for payday loans and securities companies say they are there to help those in financial difficulty, but consumer experts say the help could end up costing much more than expected.
Seven years ago, these types of businesses were essentially driven out of Jacksonville and North Florida, but News4Jax found five payday lenders operating in Duval County and eight more in neighboring counties.
Eddie Dorman said he has been in a vicious cycle with these loans for years.
“I would never do it again, if I ever got out of this one.” said Dorman.
Dorman uses one loan to help pay off another. He is currently in a fight with a securities lender in Gainesville that is trying to take his truck because he missed payments on a title loan.
“Everyone’s got problems. I got behind on a payment, the next thing you know there’s a convenience store in the front yard at 3 am,” Dorman said.
It is not a unique problem. So many people are caught in this cycle that the state of Florida has severely cracked down on securities lending, passing laws banning the 200 to 300 percent interest rates that some were charging. The maximum statutory interest rate in the state is 30 percent.
Lynn Drysdale of Jacksonville Legal Aid was instrumental in putting these limits in place. She says companies are doing something different now, charging high fees for loans rather than high interest rates. They still get your money while still being legal.
“They don’t call it Florida interest (but) it’s money you pay for using the money,” Drysdale said. “The amounts that sellers are allowed to charge in Florida are quite high.”
INTERVIEW NOT CUT: Jacksonville Legal Aid Lynn Drysdale
Payday Lenders in Northeast Florida
Dorman used his truck title loan as an example.
“They also make you take out an insurance policy for $ 700 with the money you borrow to cover them. It covers them and yet it doesn’t cover you,” Dorman said.
Instaloan offers title loans at reasonable interest rates, but charges an insurance fee even if the vehicle is already insured. When News4Jax tried to speak to Instaloan officials, the company referred us to Titlemax. We called and emailed Titlemax with no response.
While the state of Florida says there are no title lenders operating in Jacksonville, Instaloan is licensed as a consumer finance company that can hold car titles as collateral.
We also checked the securities lending companies in Georgia, where the companies are allowed to charge much higher rates. News4jax found many stores located in St. Marys and Kingsland, just across the border from Florida. We went to several to try to talk with them about loans and their business practices, but each refused us, referring us to their offices. It has been two months since our first visit and we still have not had a response.
Dorman said he wasn’t surprised they didn’t respond. He gives this advice to anyone considering taking out a title loan.
“Don’t do it. Don’t borrow money from your vehicle,” Dorman said. “If you plan to keep your vehicle, don’t take a title loan on it.”
It’s not just securities lending that are causing problems for people. News4Jax has heard several people talk about payday loans – short-term unsecured loans designed to be paid off with the next paycheck.
Josh Shaw has been using payday loans for a while and still finds that he has to go back to them about once a month to get more money.
“They help, but when you have to pay them back, you have to cycle over and over again. And once you pay it back, you pay back more and more,” Shaw said.
Drysdale said that was the reason she was trying to get lawmakers to look at these loans and offer some protection.
“A lot of them are online, and if they’re online, they’re hard to pin down if there’s a problem,” Drysdale said.
Legal Aid is tired of suing a payor who says he is based in Canada but is linked to Ireland and is actually based in Malta. Drysdale said it is difficult to protect people from these types of loans when the lender cannot be traced.
Years ago, both title and payday lenders were clustered around Mayport and NAS Jacksonville.
“I had four or five on Mayport Road, I shut them down completely,” said Bill Kennedy of the Navy Marine Corps Relief Society.
New state regulations and the Military Loans Act passed in 2007 limited the amount of interest a business can charge members of the armed forces.
The Navy Marine Corps Relief Society also assists active-duty military personnel by providing them with an alternative to payday loans and title deeds. The group can get quick assistance loans for servicemen and women with no interest and no questions asked.
“We have thousands of sailors there. We want to make sure they don’t have to worry about our bills getting paid if the car payments are made. Is the insurance made? is there food on the table? ” Kennedy said. “So we are ready to help them make sure, if anything happens, so that they can worry about operational commitments and their operational tasks.”
UNCUT INTERVIEW: Bill Kennedy of the Navy Marine Corps Relief Society
Kennedy now sees a new threat from lenders not outside the base, but from online lending, where no one is enforcing the rules. Although these loans are currently legal, they still present problems.
“These are all high interest loans – in my opinion, predatory lenders,” Kennedy said. “They do it online and they instantly put money into military checking accounts, and they set up a repayment plan.”
Drysdale said men and women in the military are among the most vulnerable to these services.
“A typical creditor can’t contact your employer just to say, ‘Mr. Smith isn’t paying his debt, you should talk to him. “But if you are in the military, non-payment of your debt can be a problem, so the lender can contact the senior officers. Also, if there are problems with the non-payment of the debt. debt, it can affect someone’s security clearance. “
Kennedy says these lenders aren’t allowed to contact their superiors, but some do.
“They love the military,” Kennedy said. “They know they are paid on the 15th. They know they are paid first.
We checked with Pioneer and Omni Credit, two of the great leaders of the active military. Omni accepted our questions but did not respond. Pioneer responded by saying he was working on a statement.
To learn more about regulating these companies or to verify a license, call the Bureau of Financial Regulation at 850-487-9687 or visit their website: flofr.com.
Click to see a spreadsheet of all companies licensed to send money in Florida.
Copyright 2015 by News4Jax.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.