OGDEN, Utah (ABC4) – If you’re thinking about financing an auto repair loan, you may want to read the fine print. A Utah-based online bank was recently flagged by the National Consumer Law Center (NCLC) for issuing up to 189% interest in loans.

The company, EasyPay Finance, works in tandem with TAB Bank, which is based in Ogden, Utah. The bank offers financing through auto repair and tire shops across the country.

Some auto repair shops that the bank issues the financing through are familiar:

  • Big O Tires
  • Grease Monkey
  • JiffyLube
  • Meineke
  • Midas
  • Precision Auto Care

But the loans violate some state laws, NCLC says.

According to the NCLC hundreds of complaints describe:

  • Deceptive promises of 90-day full interest rebates that are difficult to exercise.
  • Shocking interest rates up to 189%, with payments mostly going to interest.
  • Harm to credit reports. Payments may even be reported late for loans paid in full or for the wrong consumer. Consumers report receiving no responses to their disputes.
  • Debt collection harassment.

There are ways to avoid deceptive practices. The NCLC says consumers should consider a credit card or personal loan, and avoid any loan above 36% APR. The NCLC also advises consumers to always check the terms of a loan before signing and you should always get a copy of the agreement you sign.

Some may ask how illegal interest rates can be charged in some states.

According to the NCLC, TAB Bank uses its bank charter EasyPay to help evade state laws. EasyPay Finance loans are backed by TAB Bank and are available at auto repair and tire shops around the country. TAB is also supervised by the Federal Deposit Insurance Corporation (FDIC).

“A car repair can be a devastating expense, and financially fragile families don’t need predatory lenders amplifying the damage. EasyPay and its rent-a-bank partner TAB Bank are preying on people in a way that exploits the centrality of cars in American society. For most people, having a car that runs well is essential to their daily economic life and to managing a family,” said Elyse Hicks, Consumer Policy Counsel at Americans for Financial Reform.

The NCLC also points out that in addition to excessive interest rates, complaints about the TAB Bank and EasyPay Finance loans describe tactics to conceal the interest rate, exploitation of veterans and service members, the use of impossible-to-obtain 90-day full-interest rebate offers, unauthorized direct debits, mistakes and poor customer service, damaged credit reports, and debt collection harassment.

In an effort to put an end to predatory loans, the Stop the Debt Trap coalition, comprised of more than 800 people, is working to hold lenders accountable.