Letter to the Editor: Loan companies taking advantage of desperate economy
I’m shocked that our state allows a business to operate in this manner. During a conversation with a friend of mine, we discussed how he is surviving his recent unemployment. He mention to me, like other Americans, he had to find creative ways to pay the bills.
I inquired as to what he meant by creative. He then went and returned with his paperwork from a recent transaction with a local title loan company. I began to read the terms – annual percentage rate 360.01 percent. Wow, even the local Mafia loan sharks don’t charge this much.
I continued to read the terms – a 30-day loan of $500 will cost $500 plus $53.01 in lenders’ charges and $163.80 finance, totaling $717.66. But if he decides to re-loan, paying the finance charge of $163.80 to extend the loan another 30 days, up to a total of six times, then each time he pays the $163.80. After the allowed six re-loans if he can’t pay $717.60, he enters a monthly payment plan for a total of six months until $717.66 is repaid. So, if he goes full term for the allowed times and payment plan as allowed, he will repay over $1,700 on an original $500 loan.
This, to me, is a company taking total advantage of people in desperate situations. They are not in the position to pay off the loan, and the loan company knows this.