MEMPHIS, TN (WMC-TV) - Some Mid-Southerners are considering alternative loans to survive the economic crisis, but the Better Business Bureau is saying, 'not so fast.'
Across the city, more than 100 alternative loan locations are in business, offering the promise of quick cash loans.
At the Better Business Bureau, the phones do not ring with complaints against those businesses as often as you might think.
"In many cases, they've agreed to the terms. So they've signed a contract committing them to making these sorts of payments and these sort of interest rates, so there's not too much we can do," Randy Hutchinson of the Better Business Bureau said.
The pros to alternative loans are simple - they are quick and easy. Usually, you do not need good credit, or even any credit at all. And quick cash might even alleviate an emergency.
But the Hutchinson says to watch out.
"We advise you explore any alternative before taking out a title loan," he said.
The cons are more confusing, but boil down to interest. The typical interest rate is 25 percent per month. So, if you put up your car title for $1000, you would owe $1,250 by month's end.
If you cannot pay it and roll over the loan, you'd owe $1,500 by the end of the second month. $2,000 by the end of the fourth, and so on.
"If you can't make the payment, these are short term loans in most cases. People get to rolling them over. Can't get out of a cycle of debt, end up losing the car, which just makes it worse," Hutchinson said.
The Memphis City Council is considering a resolution that would outlaw alternative loan locations within 1000 feet of parks, neighborhood boundaries, and each other.
Already existing locations would be exempt.