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Southern car-title lenders are new to Oregon, but others have preceded them in charging triple-figure interest rates here. Ca$hCo and other finance companies such as Select Leasing Oregon, Inc. have played variations of the same game, with two major differences. They loan money for much longer periods, which means borrowers don't have to repay the principal so soon; and their rates, while still stratospheric, are far less than 300 percent. Whether they practice the new or the old version of high-interest lending, finance companies have plenty of business. Last year, nearly 11,000 Portlanders declared bankruptcy, a practice as trendy and indelible as getting a tattoo. Thousands of others teeter on the brink. "Credit," says Jewell Bailey of the nonprofit Credit Counseling Services in Portland, "is too easy to get." Terri Wilson would agree with that. Wilson (not her real name) is single and healthy and makes $28,000 a year at a secure job. Nonetheless, last fall her finances literally went to the dogs. Her beloved 13-year-old Labrador retriever couldn't get up the steps to her second-floor North Portland apartment. Wilson was unable to carry the 105-pound dog, nor could she bring herself to have him put down. Wilson found a ground-floor apartment in Northeast that cost her $225 a month more than her old one. Moving alone cost $2,300, and vet's bills ran another $150 a month. She fell behind on credit-card payments. Then, her dog developed a brain tumor. She had to let him go. "When I put my dog to sleep," Wilson says, "I was in bad shape." Things got worse. Her credit company threatened to write off her debt of $547, which would further blacken her credit rating. Unable to borrow from friends or family, she leafed through the yellow pages and found what seemed to be a solution. "In a jam? Get help now," the ad said. "Must have title to a good quality car or truck..." Wilson owned a seven-year-old Ford and not much else. The car had a broken taillight and a few scratches, but it was hers. In March, she walked into Ca$hCo's office at 2820 SE 50th Ave. Within an hour, she walked out with $915--at 208 percent annual interest. She paid her credit card bill. Instead of interest in the high teens, however, she was now paying more than 10 times that amount. She had agreed to make payments of $198.50 monthly for 10 months. In total she would would have to repay $1,985--more than twice the sum she borrowed--in less than a year. "I should never have gotten the loan, but I was desperate," Wilson says. Almost immediately, Wilson realized she had made a mistake. Previously, she had borrowed unsecured money from traditional finance companies such as the Associates and ITT at rates between 30 and 40 percent. "With them, you could miss a payment or spread them out," Wilson says, "but the title loan was different. If I miss one payment, they will take my car." That's exactly what happened to Lisa Erdman. The 36-year-old Lake Oswego resident secured $2,500 from Select Leasing against her 1995 Ford Bronco in April 1997. Her bimonthly payments equated to an annual interest rate of 120 percent. She was late with a $125 payment, and in September the company took her Bronco. State laws governing the sale of repossesed vehicles are supposed to ensure that the original owner gets a chance to buy back the vehicle or at least keep any cash that's left over once debts are paid. Erdman says that although her equity in the vehicle was more than $20,000, she never received a dime from the Bronco's sale. Steve Schneringer of Select Leasing says his company did nothing wrong. As he sees it, Erdman sold Select the Bronco for $2,500. Erdman, who manages the 19th Green restaurant at the Lake Oswego Golf Course, is currently pursuing legal options. "What they did to me is pretty shattering," she says. "They got a $25,000 vehicle for $2500." --Nigel Jaquiss
originally published September 2, 1998 |