They should be ashamed of themselves.
A few months back, I saw a commercial from Cash Call which offered short term loans to those with bad credit. The interest rate on these loans were about 99% (plus or minus a quarter point) which made the payments outrageous on the amount borrowed. It sparked quite a bit of discussion on that point - and is still one of the most popular posts I’ve done on this blog.
I read each of those comments and respond when appropriate; but today I saw another commercial that makes Cash Call look like saints. This loanshark reputable lender offers short term loans - much like Cash Call - but their maximum interest rate is a whopping 365%. No. That’s not a typo. 365%. On some loans, they do offer a relatively pallitable interest rate of 171%. As per their site:
The Annual Percentage Rate (APR) for an example $1250.00 loan is 171.5% with 36 bi-weekly payments of $91.66.
I’ll whip out my handy dandy calculator to figure out the total debt. 36 payments at 91.66 equals $3300 (plus or minus a few bucks). So on a $1250 dollar loan; you have to come up with over 2.5 times the originally loan value in 18 months. If the people applying for these loans could come up with that much extra cash in such a short period of time, why would they need a loan in the first place? Think Cash should be ashamed! This, much like Cash Call, is just another in the continuing cycle of poverty that pushes people further and further down, making it nearly impossible to improve their situation. I’m all for capitalism and making money; but capitalism without morals is no better than Communism.
But it gets worse. I went to an online loan repayment calculator and figured out much you’d have to repay on a $2500 36 month loan at 365% interest. Ready? Are you sitting down? Here you go:
Loan Balance: $2,500.00 Adjusted Loan Balance: $2,500.00 Loan Interest Rate: 365.00% Loan Fees: 0.00% Loan Term: 3 years Minimum Payment: $0.00
Monthly Loan Payment: $760.47 Number of Payments: 37
Cumulative Payments: $27,392.59 Total Interest Paid: $24,892.59
Absolutely stunning. I’m almost positive there is something wrong with the math here, but 365% interest - I guess - does add up rather quickly. Apply for this loan and kiss your future goodbye.Â
As an added bonus, Think Cash also provides 12 handy dandy tips on how to get out of debt. Here’s my tip: Don’t get a loan from Think Cash. And, apparently as a joke, Think Cash is asking for referrals. Like their service? Win $50. And they also let you refer a friend - which, I assume, is a great way to make sure you have one less friend in the world - “Why, gee, thanks Bill. I’m glad you recommended this service to me. Now I’m stuck with a loan with a 365% interest rate. You rock!”
Even Gary Coleman wouldn’t attach his name to this service. I guess in a few months, we can look forward to Ultimate Cash - get $2,500 next day with a 500% interest rate. It really wouldn’t surprise me.
Update: Are paid bloggers being used to white wash this mess? Here Here Here Here - and more are easily findable from a google blog search. All of them talking about “Think Cash” - but not a single one mentions the absolutely horrendous interest rates. Wonder why? If you are a paid blogger; fine. That’s wonderful, but please have some respect for yourself and your blog and don’t endorse programs like this.
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Ranee on November 20th, 2007
If you are going to spout off like you know something how about educating yourself or at least reading our blog posts first? I happen to know tons of people who use these services due to the area I live in. It’s the only way some of them get by.
Bloggers like you make me sick. At least I get paid.
Tim on January 9th, 2008
At least payday lenders like Think Cash, Check Into Cash and others show their customers upfront what the fee is per $100 borrowed.
Try to get a bank or for that matter a bank branch employee to explain all the fees associated with a checking account. If the banks are trying to be fair and upfront, why do they hide all their fees?
BTW - the federal government (at the banks and credit union urging) required payday lenders to post an APR (Annual Percentage Rate). However, reputable (there are a few) PDL will only allow up to 4 consecutive 2-week loans. So an APR is not applicable. It is only quoted by the ignorant and “well meaning” advocates of the poor!
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Creative Cash For Kids Home Study Program. | 7Wins.eu on October 17th, 2008
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Shaun on November 11th, 2008
Quote
“If the people applying for these loans could come up with that much extra cash in such a short period of time, why would they need a loan in the first place?”
If there is a gap between the date of a deposit and when the funds are needed. I will personally only be using the loaned amount for 2 days, accruing very minimal interest, and the whole loan will be paid on the 2 days.
They can come in handy, but the key is in knowing how much they cost, and minimizing that impact upon your finances. Dont be tempted to borrow more that you can pay back almost immediately.
Alysa O. on January 8th, 2009
Americans don’t want to hear about the national debt. It’s like a family living paycheck to paycheck, maxed out on their credit cards, trying to pretend the collection notices are all being lost in the mail. Americans are crazy about getting more and more consumer debt, by racking up credit card debt, and getting too many payday loans. Most of them are not aware of the difference between good debt and bad debt. Bad debts are debts where, once paid off, they don’t do you any good by having them. If you bought a new car, bad news old sport – you’ll never see a good resale value. If you bought a home or if you financed a college education – you are the owner of a good debt. Homes appreciate in value, and education guarantees a higher earning potential over your lifetime. For instance, the more you pay down the mortgage, the more of your home you own, and therefore the more equity you have. A payday loan, depending on use, can be a good debt, especially if you use it to avoid unpleasant fees and interest on late payments. You can read more in the article posted on the payday loan blog at personalmoneystore.com
jim on March 17th, 2009
Questions to those who borrowed from a payday lender and are looking for ways to not repay…
1. You borrowed the money, didn’t you?
2. All the details were in the loan agreement, right?
3. This is a free society - no one forced you to borrow the money, right?
Then stop looking to blame everyone else. You borrowed the money, so pay it back and stop complaining.
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Sarah on July 7th, 2009
What a lot of people don’t realize about loans is that the interest is cumulative. So, let’s take the 365% and use a nice round $1200 to begin with (as there are twelve months in a year).
Let’s say the amount you pay is $50 a month, so in the year you’ve paid off 50*12 which is $600. BUT, in that year (these figures are somewhat simplified, but they give an idea of how it works) your INTEREST would amount to 1200+365% (4380) for a total of $5580 debt at the end of the year. Take off the 600 you’ve paid and at the end of the year instead of owing $600, having paid $600, you still owe $5980.
Those figures in your calculator? They’re absolutely correct.
This is why companies like that don’t like long term loans. When people realize how much they are actually paying in interest, NOBODY in their right mind would apply for one of these loans! They are absolutely ridiculous.
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