LOUISVILLE, Ky. (WAVE) – Kentucky law allows triple-digit interest rates on certain loans. The logic of the 1960 law was simple. 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 from EasyPay Finance, she unknowingly accepted a loan with an APR of 164%. She contacted WAVE troubleshooters to ask how that rate could be legal, and she is not alone.
“If I had known I was paying $1,100 for $500 tires, I never would have done it,” Crystal Hall said.
Hall said he bought four new tires and an oil change at the Big O Tires location that caught fire in 2020. He owed $536, and instead of depleting his Big O Tires card, he decided to use EasyPay Finance.
“I thought about using EasyPay because I thought it would be easy,” said Hall.
She said she planned to pay her $536 bill in installments. However, when she withdrew the money from her checking account, she was paying $95 per month. Her then-husband calculated that she would pay a total of $1,135 — 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 tyres. I feel very taken advantage of.
“It seems very high,” said Kentucky House Banking Committee Chairman Bart Rowland. “It is a topic that is new to me, surprisingly five terms, ten years in the legislature, it is the first time.”
When lawmakers passed the current law in 1962, a University of Kentucky law professor suggested 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 still is. Kentucky limits interest to 36% for certain loans, but installment loans have no limit. Rowland said lawmakers could look to Kentucky’s other laws as a starting point.
“Those are always complicated issues when they come up, but you can see what’s been done with consumer finance loans, payday loans, that’s a good starting point,” Rowland said.
The legislature is wrapping up its session this year, but consumers like Pollock and Hall want something done.
“I was on a limited income at the time,” Hall said. “We were counting pennies just to shop.”
Crystal’s $1,100 tires won’t do her any good either. She said she was in an accident on I-65 in March, and her car is now impounded, tires and all, waiting to be auctioned off or scrapped.
WAVE contacted 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 every customer served by a franchisee. A typical franchisee offers several financing options to ensure that they can help all customers, regardless of income or credit status, with their automotive needs. EasyPay Finance is a source of financing that some franchisees choose to make available to their customers. EasyPay Finance has a strong reputation in the credit finance industry and has demonstrated a commitment to transparency and full disclosure with its clients as part of its business practices.
We can’t discuss the details of how each of Big O’s 466 locations spreads information; however, Big O understands that all details of EasyPay Finance are disclosed to those who choose to use the product prior to loan acceptance and that any process used complies with all laws, including the Truth in Lending Act. Big O also expects its franchisees to ensure that their employees comply with all laws, have a customer-first mindset, and are open and honest in all dealings, including EasyPay Finance options. Big O will have their operations team look into this matter and we appreciate you bringing it to our attention.”
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