Small Loan, Big Interest: How One Woman Was Billed More Than Double What She Was Loaned

Need to buy a big ticket item, but don't have the cash?

Many retailers are offering a financing option instead.

But consumer advocates say one company offering the financing has found a loophole in the law, that allows them to charge you way too much.

"I've been a stereo fanatic since I was a kid," said Lisa Perry.

Because of Perry's affinity for fine music machines, she was willing to shell out $1,300 for a stereo system for her car.

She was offered quick and easy financing through a company called SNAP.

"They said you're approved for $1,300. Do you wanna do it? And I said yeah," she said.

Perry's purchase was financed through SNAP! finance - a Utah-based company that offers on-the-spot financing at hundreds of retailers - like for furniture, tires and mattress stores.

The financing is free, minus a small processing fee, ifif you pay off what you owe in 100 days.

That part is crucial.

If you don't, interest kicks in. And Perry was shocked by just how much.

"They wanted me to pay $2,600...for $1300 worth of equipment. I was like no,'" she said. "Who's going to do that?"

Perry says the true cost of financing wasn't verbally disclosed when she bought the stereo. But it is disclosed in the contract she signed on a tablet. After 100 days, she agreed to pay the $2,600.

"It's unfair, it's predatory," said Graciela Aponte of the Center for Responsible Lending.

Aponte says the interest rate on Perry's financing is about 160 percent. That's illegal in California. So how can Snap! charge that much? Interest rate caps are for loans.

Snap! calls its financing a lease.

Aponte calls it a loophole.

"We've found lenders that find various different ways to evade state interest rate caps. So we think this is one way it's being used to evade our interest rate cap," Aponte said.

In a statement to the I-Team, Snap! didn't address the issue, instead saying "Snap! Finance offers a variety of flexible financing solutions to give consumers from all credit types the ability to access financing…" It also said it's transparent about its financing "so consumers can make informed decisions."

After NBC4 reached out to Snap! it wiped out Perry's balance. Perry says from now on, she'll only pay with cash. She hopes other consumers learn from her mistake.

"Don't sign anything unless you know exactly what you're doing," Perry said.

The Center for Responsible Lending also says if you're offered financing to confirm if it's a lease or loan. You have more protection for loans. However, the interest rates vary depending on the amount you finance.