Jennifer Wilkinson is no fan of the title-loan industry. Last year she borrowed $250 to pay for medical supplies, using the title to her 10-year-old station wagon as collateral. She was given 30 days to repay the loan with the usual high interest -- about $305 total. When she failed to pay up on time, the company to which she'd given her title repossessed her car.
To redeem it, Wilkinson had to pay more than $800 -- the full amount of the loan, plus a $375 repossession fee, storage fees and "administrative costs."
"It was my only car," Wilkinson says, "and I couldn't get the car back because I didn't have the $800." In desperation, she turned to relatives, who loaned her the money.
"I will never, ever, ever take out another title loan," she says. "It wasn't the interest rate that killed me; it was the extra fees. They nickeled and dimed me to death."
The Florida Legislature has fiddled frequently with regulating title-loan interest rates that climb to 264 percent -- and came as close as ever to doing so in the recent legislative term. But no one has ever proposed capping peripheral fees, an omission that worries the office of the state comptroller.
As local governments, including Orange County, move to impose loan limits where the state so far has failed, those untended add-on fees promise to further exploit the poor whose business anchors the title-loan industry.
Randy Crowder, an investigator with the state comptroller's office, says title-loan agencies might increase storage and repossession fees if their interest rates are the only fees regulated. "They've got to make the money somewhere," he says.
Lobbyists for the industry have made any sort of regulation into wishful thinking. In 1998, the industry contributed nearly $200,000 to Florida politicians. That money, split almost equally down party lines, gives the industry considerable clout. Although two regulatory bills were approved by the Florida House this year -- potentially slashing annual interest rates to 30 percent -- the Senate never agreed on the measures, and the bills died. Since 1995, nine bills regarding the title-loan industry have failed.
Frustrated by the lack of progress at the capital, county commissions in Orange and Seminole counties are moving ahead on their own. Following the lead of cities such as Jacksonville, the counties hope to develop ordinances curbing rates charged by companies that Florida Attorney General Bob Butterworth once said "make the mob look good."
"It's definitely something we need to look at," says Orange County Commissioner Clarence Hoenstine. "We're looking carefully at the industry and would like to ensure that no one is being taken advantage of." The county doesn't want to run companies out of town, he says, but rather they want to develop an interest rate that all can agree upon. "I want to assemble a blue-ribbon committee that will investigate this industry fairly and objectively," he says.
The Orange County Commission is scheduled to revisit the matter May 25. When they do, the debate will focus on interest rates and will most likely ignore the extra fees completely. "We may look at the fees at a later date," says Hoenstine. "But we need to tread softly with this issue. We need all the facts before we make any decision."
Current state law allows title-loan companies to charge 22 percent interest per month, or 264 percent annually. Additional administrative fees can be astronomical, especially if customers are unable to repay the loan within the stated time frame.
Consumers who are unlucky enough to miss a payment may have their cars repossessed. In order to get the car back, the customer must pay his loan in full, as well as pay a repossession fee. That fee has been as high as $375, although the law now caps it at $295.
Although many companies, such as Loan Ranger Title Loans, charge the maximum repossession fee, other companies only pass along their actual repossession costs -- usually about $150. But companies can charge storage fees that typically run about $20 per day. That means that while a customer is scraping up money to get a car back, the company that holds it is adding an even greater burden. These fees often start a downward spiral that results in the customers losing their cars.
"The hidden fees are outrageous," fumes Wilkinson, who is still paying off her relatives. "They didn't help me one bit. I should have just borrowed from my relatives in the first place."
Many title-loan companies fear that strict regulation will effectively close their doors. "They'll put us out of business," says Laurie Wardenski, owner of Express Cash, a title-loan company with four Central Florida locations. "A 30 percent annual interest rate will kill us, because the loans are so high-risk."
Because title loans are usually short-term contracts, a 30 percent interest rate translates into very little money for the loan agency, she says. The average loan is less than $300 and lasts for about three months; at 30 percent, that's $22.50 in interest charges. "That doesn't begin to pay our light bill or rent," says Wardenski.
She adds: "We want to work out a reasonable agreement with the counties. If we're gone, crime will increase. People have to get their milk and eggs somewhere. They just don't understand how many people we help."
Wardenski's company does not charge repossession rates. Express Cash only charges the interest rate and avoids administrative fees. "We stick to the letter of the law," says Cheryl Gelts, an Express Cash area manager, "and we think repossession fees are unlawful, even though we often have out-of-pocket charges of $150 to repossess a car. Besides, companies only charge fees when someone defaults on their loan. Why shouldn't they recoup their losses?"
One customer, who identified herself only as Julie, took out a loan for $150 to pay electric and food bills. "I understand the interest rate, and they're not charging any other fees. If I let my car be repossessed, I think I should have to pay the fees to get it back," she says, quickly adding, "But I'm not going to let that happen."
Though Express Cash does not charge additional fees, their title-loan contract lets them charge for repairs, judgments, lawsuits, attorneys fees and court costs, if necessary. "We don't want the car," says Gelts. "We just want our money back."
Says Wilkinson of the industry: "They don't just want their money back. They want a whole lot of my money, too."