Recent nursing school graduate Alicia was working hard to support her daughter, who was in college.

She thought a short-term loan would provide some relief from her tight expenses. But because of her other debt, Alicia was sure no bank or credit union would lend her the money. So she went to a payday lender in her neighborhood and took out a $500 loan.

“It was the simplicity of the transaction that made it enticing,” Alicia said.

She renewed the loan seven times because she could only afford to pay the $85 interest payment every two weeks, and eventually paid $595 in interest. She also took out two more $500 loans.

Alicia had to work extra shifts at the hospital to sustain her loans and eventually pay them off. She was too ashamed to talk about her debt or ask family members or friends for help.

“Everyone around me assumed I was doing great, which made me feel like a liar,” she said.

In total, Alicia repaid $2,945 to borrow $1,500 for just a few months. She feels lucky that she was able to break out of her debt and hopes others can as well.

“Some people may feel, as I did, that this business is their only option,” she said. “Unfortunately, there is no counseling, and without a steady income or an opportunity to increase income, it is impossible to break free.”

Ruby’s daughter’s asthma was getting worse, and she couldn’t keep up with the weekly treatments along with her other bills. So Ruby, who at 68 was suffering from heart problems and didn’t have any extra money to help, decided to use her pickup truck to secure a loan for her daughter from a title lender in Troy.

She gave the money to her daughter, who promised to pay it back monthly.

Soon afterward, Ruby and her daughter asked a lender in Dothan to buy out the loan. The store extended a new loan with a principal value of $2,218.14 to cover the principal and interest due from the first one. Ruby was sure her daughter was taking care of the payments until she got a surprise call from a lender employee who told her the total value of the loan was up to $3,000, and it needed to be paid off immediately.

The lender would not accept partial payments or offer a monthly payment plan but instead sued her in small claims court to recover the money. Ruby argued in response that she didn’t owe $3,000. But without her knowledge, the lender obtained a judgment. A sheriff’s deputy soon arrived at her house and took her husband’s car, which was worth $3,200 but was not the vehicle she had used to secure the loan.

Ruby obtained legal help to fight the repossession. The judge ordered that the sheriff’s office must return the car. Even after this ruling, the sheriff’s office refused to return the car unless she paid a $200 repossession fee. That, too, was struck down by the judge.

Ruby believes that lawmakers must provide additional protections for consumers. “I wouldn’t allow them to have those loans, unless they did it more fairly. The way it is now, I wouldn’t even allow that.”

The experience shook her both financially and personally.

“I go by what God said: ‘Thou shalt not steal.’ And that’s stealing. It is.”  

Joan and her husband never borrowed money. But when they struggled to pay their power and doctors’ bills, they turned to a payday lender in their neighborhood. As proof of income, they used Joan’s Social Security award letter. She received $524 per month, her only source of income.

The payday lender offered Joan a $100 loan.

Joan, who was then 54, knew that the money wouldn’t cover her expenses, so she obtained two other loans from payday lenders that same day – one for $150 and another for $100. Neither lender asked whether she had additional outstanding loans or about her other expenses. One of the lenders required a payment every two weeks, even though her Social Security check came monthly. She didn’t fully understand the interest she would be paying.

When Joan paid off her initial $100 loan, the lender told her she was now eligible for a $200 loan, even though her income had not changed. She accepted the loan and renewed the other two.

It wasn’t long before she could no longer keep up with the payments. When she was late with a payment, one lender cashed the check she was required to leave, causing an overdraft in her account and subjecting her to additional fees. She was not offered an extended repayment plan from any lender.

Now her loans are in the hands of other companies for debt collection, and they have informed her that the amount due has increased dramatically. One company said she now owes $219 on one of her $100 loans, without explaining the charges that caused her balance to balloon by more than $100 over the $117.50 due originally.

Joan’s contracts also ask whether she or her spouse is an active-duty member of the U.S. Armed Forces. While Congress has limited the interest rate to 36% per year for active-duty service members and their families, no such protections are in place for veterans or civilians. Her husband is an Army veteran who was honorably discharged, and the two feel that they, too, deserve protection from these predatory lenders – as do other civilians in their situation.

Joan and her husband hope that in the future those who are most in need of money, as they were this past summer, can be protected from the extremely high rates they encountered. “It’s price-gouging,” Joan’s husband said.

Joan wishes that she had known more about these loans and her other alternatives before walking into those stores. “I would never do this again,” she said. “Even if I needed money, I would rather let my lights turn off until I get the money to pay.”

Latara Bethune and her husband run a small shop in Dothan where they cut and style hair, but she was unable to continue working during a high-risk pregnancy. She needed money to renew her car’s registration and insurance as well as to pay the power and phone bills. So she went to a title loan store.

After inspecting her car, the salesperson offered her twice the amount she requested. She was hesitant, though, and replied that she was worried about her car being repossessed if she fell behind on payments.

“No, we don’t work that way,” the employee told Latara, who was 27 at the time.

The employee explained that Latara would owe $100 per month but did not explain how many payments she would need to make or inform her about the fees that would be charged if she were late making a payment. The reality was, if Latara paid $100 per month, the terms of the contract ensured that she would be making payments for 18 months, paying back a total of approximately $1,787 for her $400 loan.

Latara was also charged between $2 and $3 per day when she was late and was sometimes called and threatened. One lender employee told Latara that if she did not provide the keys to her car, they would call the police and accuse her of stealing.

Scared and angry, she felt she had an impossible choice – face jail time and the loss of her car if she did not pay, or the loss of her phone and electricity if she could not pay her utility bills. “Without a phone, I can’t talk to clients. Without a car, I can’t drive the seven miles to work.”

Latara feels that she was tricked. She said the lender employees seemed sympathetic during her initial visit to the store and promised to work with her when money was tight. She is still working to pay off the loan but has started looking for another loan at a more reasonable rate to pay off the title lender and keep her car.

Cierra Myles had an income of only $39 per week through child support. She made extra money occasionally by helping out at her mother’s job, but her months of searching for a regular job had proven fruitless. When she needed money to keep the lights on and put food on the table for her children, she turned to a title lender in her neighborhood.

The salesperson there asked for minimal information and explained little about the loan terms. Cierra, who was 25 at the time, agreed to make monthly payments of $129 on a $700 loan secured by a car she had bought a few months earlier for $1,200. The employee never explained that the principal would need to be paid in full in 30 days unless the lender agreed to roll it over for another 30-day period. Rules about late and repossession fees also were never discussed.

She made the first several payments on time but then began to fall behind. She kept in touch with the lender, offering assurances that she would make her late payments soon. She was told everything would be fine.

But it wasn’t. Using the spare key she had been required to leave, someone came and repossessed her car.

She was then told she could get it back if she brought in the late payment. But when she arrived, the employees insisted she pay $1,000, an amount that included the remaining principal, interest and $200 repossession fee. A late fee was also accumulating daily. She had no way of obtaining the money.

Losing her car has been devastating for Cierra and her family. She lives in a city without dependable public transportation and must rely on friends and family members for rides or borrow vehicles to take her children to school and look for jobs. When she drives by the title loan store, she can still see her vehicle, waiting to be sold. “I feel embarrassed and upset every time I see my car behind that fence.”

Edward worked hard to secure enough money for retirement. Until he was 60, he worked for various companies around Birmingham, finding work as it was available. Once he got older, he started doing odd jobs for friends and neighbors. In the past, he was always able to make ends meet to support his large family.

In 2007, Edward, then 89, was receiving Social Security and earning extra money from the occasional odd job. He was approached by a younger relative who needed money to repair his car. Edward wanted to help but didn’t have the money. He decided to take out a title loan on his 1996 Buick Riviera. Edward didn’t have much experience with loans and banking, but he understood that he was borrowing $800, and with interest would pay back $1,000. He was sure he could pay the money back. Over the next five months, Edward paid $200 per month until he paid the $1,000 he thought he owed.

But the lender informed him that he still owed the $800 principal because he had been paying only the monthly interest. Edward said that if he had been informed of this before taking out the loan, he would have looked for other options or at least tried to pay the loan off earlier. Feeling angry and tricked, he decided not to pay any more money. Several weeks later, his car was repossessed. The Buick, worth about $2,500, was his family’s only means of transportation.

A friend who was a lawyer offered to help. But after studying the law, he was outraged to learn that charging a 300% annual rate is perfectly legal in Alabama.

Fortunately, his friend lent Edward the $1,200 need to pay off the principal, interest and repossession fee so he could get the vehicle back. That meant the lender had received a total of $2,200 for the $800 loan.

Edward said he will never take out a title loan again, and he hopes Alabama lawmakers will reform what he considers a dishonest business.

Reginald worked hard to make a good life for himself and his family. With he and his wife both making enough money and in stable jobs, they decided to have a child.

But, in September 2011, less than five months before the baby was due, he was told the store where he worked as an assistant manager was closing in just 11 days. Reginald applied for unemployment benefits and started looking for any job he could find. His wife kept working part time, but they couldn’t make ends meet, even after cutting out non-essential expenses.

Over the next seven months, the period in which he was unemployed, he took out a series of payday and title loans totaling $1,575, struggling to keep up with interest payments and pay off the principal on some of the loans. At one point, the family went without electricity for three weeks.

When he couldn’t make payments, the lenders would cash the checks he left with them, which would incur overdraft fees. Reginald also received many calls from the lenders and collection agencies, who told him things like, “We’ll subpoena you to court on charges,” trying to make it sound like he could face criminal charges. They offered to let him off if he could pay more than three times the amount he owed.

Reginald paid $10 or $15 whenever he could. But even though he paid a total of about $1,900 in interest and principal, not including the money he paid in overdraft fees, he still defaulted on four loans.

A $3,000 title loan is still outstanding. His monthly interest payment is $300, so he tries to pay about $450 each month. Even if he keeps paying every month at this rate, he will pay approximately $2,200 in interest by the time the loan is repaid.

Reginald learned that payday and title lenders target those who are not able to pay their loans in the first month. “When you go in there, it’s almost like they’re fishing. You’re just bait. They don’t expect you to pay it off. They expect you to be on the hook to renew the loan over and over and over again.”