HOUSTON, TX - Many consumers who need some cash quickly opt for a short term loan such as a Payday or title loan.
While those businesses may legitimate services to offer, many consumers end up huge financing charges. That's what happened to Twyanna Cortez.
She first learned about Power Finance from a flyer she got in early last year. She remembers needing $600 quick cash. "And I was just going to use the money to do some shopping and plan a trip," Cortez said.
She admits she didn't read the documents carefully, but agreed to payment terms: she had two weeks or one pay period, to pay back that $600 loan.
Cortez says agreed Power Finance could debit $480 out of bank account every two weeks.
Then Cortez took out another $200--upping her original loan to $800. For more than a year she paid $480 a month to Power Finance..just on interest.
According to Power Finance's paperwork, Cortez was paying a $2280 finance charge on an $800 loan. That's the equivalent of an annual percentage rate of 756 percent!
"And this is when I knew, oh Lord I have made a grave mistake...I just can't believe I let myself do something like this." " she said. Cortez said she will never do that again.
After Consumer Reporter Emily Akin contacted Power Finance, Cortez said the company agreed to totally clear her account.
Before you take out a short term loan, consider these alternatives.
You've got options besides the Payday and Title loan credit access business on the corner.
- City of Houston's Bank on Houston http://www.houstontx.gov/bankonhouston/, 832.393.3406.
- Promise Credit Union, http://www.nci-cdcu.org/ which is sponsored by Baker Ripley
Contact FOX 26's Emily Akin if you've been hurt by Payday Loan scams: “Take it to Akin”, 713-479-2926.