LOUISVILLE, Ky. (WAVE) — Kentucky law permits triple-digit interest rates on certain loans. The logic of the 1960s 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 from EasyPay Finance on behalf of Debbie Pollock, she unknowingly agreed to a 164% effective loan. she contacted the WAVE troubleshooters wondering how that phrase could be legal, and she’s 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 she bought four new tires and an oil change at the Big O Tires site that caught fire in 2020. She owed $536, and instead of maxing out her Big O Tires card, she chose EasyPay Finance.
“I thought I’d go through EasyPay because I thought it would be easy,” Hall said.
She said she plans to pay her $536 bill in installments. However, when the money was withdrawn from her checking account, she was paying $95 a month. Her then-husband calculated that she would pay a total of $1,135 — 168% APR, to be exact.
“Over 100% APR on it,” Hall said. “It’s ridiculous. It wasn’t explained to me at all when I bought these tires. I feel very taken advantage of.”
“It seems very high,” said Bart Rowland, chairman of the Kentucky House banking committee. “It’s a subject that’s new to me, surprisingly five terms, ten years in the legislature, it’s a first time.”
When the legislature passed the current law in 1962, a law professor at the University of Kentucky suggested going a step further and introducing an interest rate cap, like six other states do.
“The sky’s probably still the limit,” Charles Whitehead wrote then, and still is. Kentucky caps interest rates on certain loans at 36%, but installment loans have no cap at all. Rowland said lawmakers could look to Kentucky’s other laws as a starting point.
“These are always complicated issues when they come up, but you could look at what’s been done with consumer credit and payday loans, that’s a good place to start,” Rowland said.
The Legislature is concluding its session for this year, but consumers like Pollock and Hall want to see something done.
“I had limited income at the time,” Hall said. “We counted pennies just to buy something.”
Crystal’s $1,100 tires won’t do her any good either. She said she was involved in an accident on I-65 in March and her car is now impounded, tires and all, awaiting auction or scrapping.
WAVE turned to Big O Tire’s parent company for these high-interest loans. A spokesman wrote:
“Big O Tires, LLC is a franchisor and, except on rare occasions, does not own or operate Big O locations. However, Big O takes care of every customer that is served by a franchisee. A typical franchisee will offer multiple financing options to ensure they can support all customers with their automotive needs, regardless of income or credit status. EasyPay Finance is a funding source that some franchisees make available to their customers. EasyPay Finance has a solid reputation in the credit finance industry and is committed to transparency and full disclosure in its business practices with its customers.
We can’t go into detail about how each of the 466 Big O sites disseminates information; However, Big O understands that all details of EasyPay Finance will be shared with those who choose to use the product prior to accepting the loan, and that all procedures used comply with all laws, including the Act on Truth in Lending. Big O also expects its franchisees to ensure their employees are compliant with all laws, have a customer focus and are open and honest in all dealings, including EasyPay finance options. Big O will have this matter investigated by its operations team and we thank you for bringing it to our attention.”
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