PONTIAC - Joseph Ledford was desperate when he obtained a $965 loan from Title Cash of Illinois in Normal two years ago.

Ledford was on disability from his job at Kmart, and his wife was recovering from several surgeries. They needed money to pay rent.

"I just had this sick feeling in my stomach," the 30-year-old Pontiac resident said. "I was thinking that I couldn't believe I did it and I felt that I was backed into a corner.

"I just felt afraid … We received a letter saying that we were going to get evicted."

After being unable to pay back the loan, which had an interest rate of more than 300 percent, Ledford owed more than $4,000 before a recent settlement was reached. The case illustrates the pitfalls of obtaining title loans, which are virtually unregulated in Illinois if the loan is longer than 60 days, according to one state agency spokeswoman.

In his moment of desperation, Ledford went to Title Cash in July 2006 and put his 2003 Dodge Neon up for collateral. He borrowed the $965, $65 of which went to loan fees, $700 for rent and the rest for some extra bills.

Title Cash charged a 304 percent annual interest rate, with a $1,688 payback required. Ledford made the first two monthly payments of $241, but missed the final payment of $1,206 because of personal issues related to a divorce from his wife.

That sent the bill into a tailspin. The exact amount Ledford owed eventually totaled more than $4,000. Until recently, he kept his car hidden in his garage to avoid repossession.

He said he made several attempts at negotiations with Title Cash, but a settlement was not reached until recently. He also contacted both the Illinois Department of Financial and Professional Regulation and Illinois Attorney General's office last year to try and solve the problem, but got no help from either agency.

Ledford said at one point he proposed paying back more money than he owed, but said that he was just laughed at.

John Johnson, Title Cash regional supervisor, said that he was unaware of that offer and said Ledford offered to payback $300 less than the original loan, or $665, and was going to contact family members for help.

Johnson, though, told The Pantagraph the dispute needed to end and that he would accept payback of the original $965 to settle the matter. Ledford did so soon after.

"I am just glad to be done with it," Ledford said.

Meanwhile, the Pontiac man is not alone with his gripes about title loans.

"We get complaints everyday, and most of the time it is 'They told me one thing and now it's something else,'" said Sue Hofer, spokeswoman for the Illinois Department of Financial and Professional Regulation.

Hofer said short-term lending in Illinois is regulated by two laws, the Payday Loan Reform Act and the Consumer Installment Loan Act. Loans like Ledford's are governed by the latter, and that law restricts title loans to a percentage of a person's income if the loan term is 60 days or less.

However, Hofer said, many institutions dodge the guidelines by increasing the term to longer than 60 days, as Title Cash of Illinois did. That allows them to charge unlimited interest rates.

Hofer also said that a 300 percent interest rate is not as outrageous as some she's heard of, which have ranged from 400 to 1,000 percent annually.

But Johnson said the purpose of payday loan or cash advance businesses are to provide an alternative source of money for emergencies. The high interest rates are a direct result of the risks taken.

"We have a lot of decent customers but we do get people who think they know how to beat the system and that's the nature of any business, especially one that is loaning money," Johnson said. "What happens when people do that is that the interest rates become as high as they are now."

LaVonne Shilson, manager of Pontiac's Personal Finance Co., said those rates are the reason she doesn't recommend the short-term borrowing.

"I know that they charge high interest . . . so I don't recommend my customers to them because of that," she said. "Combined with the (shorter payback) terms, it basically overextends them."

And Ledford offered his own advice.

"If someone is considering doing a title loan, don't," he said. "I would explore every other avenue possible."