ROCHESTER, NY This consumer alert concerns a serious matter that we want you to consider.
Would you take out a loan if you knew the interest rate was 189%? For most of us, the answer is a resounding no. But I learned that these types of loans are offered here in Rochester. You might think it’s illegal.
After all, New York is a state that has a number of consumer protection laws in place. And loans are no exception. New York caps the interest rate on small installment loans at 25%. So companies are doing what consumer advocates call bank lease loans with rates as high as 189%.
The National Consumer Law Center is one of many consumer advocacy groups calling rent-a-bank loans predatory. It was one of several consumer advocacy organizations that recently sent letters to businesses across the country urging them to “stop offering loans through predatory lenders.” Easy financing and Transportation Alliance Bank (TAB Bank).
Easypay Finance transfers its loans through an out-of-state bank called Transportation Alliance Bank (TAB) of Utah, which is not subject to our state’s lending limits. It then offers its financing services to auto repair shops in our region. But consumer advocates say these loans are often extortionate with interest rates as high as 189%.
Let’s say you’re driving and your car stops. You learn you’ve blown a head gasket, a repair that will cost you $2,000. You deposit $500 and the auto repair shop offers you a loan for the remaining $1,500 to be paid over 12 months.
But the Consumer Law Center maintains that Easypay does not disclose that the loan is at an interest rate of 189%. At this rate, your loan repayments are approximately $293. By the time you pay for this repair, you will have paid interest of $2,016. And the total cost would be around $3,516, more than double the original loan amount.
While businesses across the country received the letters months ago, according to Easypay’s website, the loans are still being used by thousands of businesses, including auto repair shops in the Rochester area. . The site presents 34 auto repair companies in our region that use Easypay financing. All are under Monro inc. umbrella: Monro Auto Service, Mister Tire and Tire Choice Auto Service.
I contacted the executives of Monro Inc. as well as Easypay. Nobody from Monro answered calls and emails, but Easypay people got back to me promptly. A spokesperson disputes the claim that their lending practices are predatory and they say it is often the only option available to many.
“Many Americans are being left behind by the traditional banking and credit system. EasyPay facilitates financing options to ensure that these consumers have a reliable and secure choice to access otherwise unavailable credit for urgent needs and discretionary purposes. Through a transparent process, we offer a range of credit levels based on the borrower’s credit profile, with an interest repayment program designed to encourage repayment. Our products are offered to eligible consumers in accordance with applicable federal and state laws. – EasyPay financing
While consumer advocates say Rent-a-Bank loans are friendlier than payday loans, they insist there are better options for those with no credit or bad credit. credit. CNBC, The bank rateand nerdwallet all have a number of suggestions.