Troubleshooters: Triple-digit interest rates could be banned similar to payday lender law

“Had I known I was paying $1,100 for $500 tires, I would have never done it,” Crystal Hall said.
Published: Apr. 11, 2022 at 3:55 PM EDT
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LOUISVILLE, Ky. (WAVE) - Kentucky law allows for triple-digit interest rates on certain loans. The logic of the 1960′s law was straightforward. Consumers have the option of paying the cash price or the credit price, but the credit price can more than double the total bill.

When Big O Tires applied for a loan on Debbie Pollock’s behalf to EasyPay Finance, she unknowingly agreed to a 164% APR loan. She contacted the WAVE Troubleshooters to inquire how that rate could be legal, and she is not alone.

“Had I known I was paying $1,100 for $500 tires, I would have never done it,” Crystal Hall said.

Hall said she bought four new tires and an oil change at the Big O Tires location that was set on fire back in 2020. She owed $536, and instead of maxing out her Big O Tires card, she decided to go with EasyPay Finance.

“I thought I’d go through EasyPay because I thought it would be easy,” Hall said.

She said she planned to pay her $536 bill in installments. However, when the money was withdrawn from her checking account, she was paying $95 per month. Her then-husband calculated that she would pay a total of $1,135 dollars — 168% APR to be exact.

“Over 100% APR for this,” Hall said. “This is ridiculous. This was not explained to me at all when I bought these tires. I feel very taken advantage of.”

“It does seem very high,” Kentucky House Banking Committee Chair Bart Rowland said. “It’s an issue that’s new to me, surprisingly five terms, ten years in the legislature, it’s the first time.”

When lawmakers passed the current law in 1962, a law professor at the University of Kentucky suggested that they go a step further and include an interest rate cap, as is done in six other states.

“Presumably, the sky is still the limit,” Charles Whitehead wrote at the time, and it still is. Kentucky caps interest at 36% for certain loans, but installment loans have no cap at all. Rowland said lawmakers could look at Kentucky’s other laws as a starting point.

“Those are always complicated issues when they come up but you could look at what’s been done with consumer finance loans, payday loans, that’s a good starting point,” said Rowland.

The legislature is wrapping up its session for this year, but consumers like Pollock and Hall want to see something done.

“I was on a limited income at that time,” Hall said. “We were counting pennies just to get buy.”

Crystal’s $1,100 tires won’t do her any good either. She said she got in a wreck on I-65 in March, and her car is now impounded, tires and all, waiting to be auctioned or scrapped.

WAVE reached out to Big O Tire’s parent company about these high interest rate loans. A spokesperson wrote:

“Big O Tires, LLC is a franchisor and does not own or operate Big O locations, except on rare occasions. However, Big O cares about each customer serviced by a franchisee. A typical franchisee provides several financing options to ensure it can assist all customers, regardless of income or credit status, with their automotive needs. EasyPay Finance is one financing source some franchisees choose to make available to their customers. EasyPay Finance has a strong reputation in the credit financing industry and has demonstrated a commitment to transparency and full disclosure with its customers as part of its business practices.

We cannot speak to the detail of how each of the 466 Big O locations disseminates information; however, it is Big O’s understanding all EasyPay Finance details are disclosed to those whom decide to use the product prior to the acceptance of the loan and that any process used conforms to all laws, including the Truth in Lending Act. Big O also expects its franchisees to ensure their employees are abiding by all laws, have a customer first mentality and are open and honest in all dealings, including EasyPay Finance options. Big O will have its operations team investigate this matter and we thank you for bringing this to our attention.”

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