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The Mafia probably has better APR%

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pj421fly
Valued Member

The Mafia probably has better APR%

I saw a commercial on TV last night and I just happened to see something that looked odd. I paused the commercial on the fine print and read through the terms of a $5000 personal loan. The commercial would want you to believe they were better than a payday loan, but after a quick calculation I could only believe there was something wrong in the ad.

If you were to tell someone about this loan they would think you were lying, so I looked them up on the internet and sure enough the Mafia never made it this bad to borrow money. It would be completely hilarous if it were not for the fact that I am sure someone maybe desperate and turn to these people as a last resort only to find out in a month or so they have just committed financial suicide.

These companies should be run out of the country regardless of their native heritage....So without further rambling I have included the link to see for yourself how a $5,000 loan becomes a 42,800 debt!

 

http://www.westernsky.com/General/Rates.aspx


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8 REPLIES 8
llecs
Moderator Emeritus

Re: The Mafia probably has better APR%

I think I saw the same commercial, but didn't read the fine print. Caveat emptor! Reminds me of a post I saw on here once of a similar loan product. The APR is reasonable if you pay within 2 months. But after 2 months, your rate skyrockets where you are legally obligated (per the agreement) to pay 4000% of the loan value, with no early pay off option. Your example above is much worse, though.

Message 2 of 9
FrugalRican
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Re: The Mafia probably has better APR%

I'm sure tons of people will fall for it too. Sad.

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Message 3 of 9
pipeguy
Senior Contributor

Re: The Mafia probably has better APR%

The terms, interest rates, etc are just incredible which I find hard to believe are legal. I did read the "terms" which says you are bound by the tribal court system, etc - THEN I ran into this today:

 

http://www.insidearm.com/daily/debt-collection-news/debt-collection/ftc-goes-after-payday-lender-tha...

 

The Federal Trade Commission announced Wednesday that it has expanded its case against an allegedly deceptive payday lender, charging that it sought to unfairly and deceptively manipulate the legal system and force debt-burdened consumers throughout the country to travel to South Dakota and appear before a tribal court that did not have jurisdiction over their cases.

...

 

The company, its owner, Martin A. Webb, and several others named as defendants pitch short-term, high-fee, unsecured payday loans to consumers on television and the Internet.

 

Might just be me, but the "owner" doesn't sound like a Cheyenne River Sioux name.

 

The amended complaint names as defendants Payday Financial, LLC, Great Sky Finance, LLC, Western Sky Financial, LLC, Red Stone Financial, LLC, Financial Solutions, LLC, Management Systems, LLC, 24-7 Cash Direct, LLC, Red River Ventures, LLC, High Country Ventures, LLC, and Martin A. Webb.

 

FTC has had previous action toward these same actors:

 

http://newsroom-magazine.com/2011/government-agencies/federal-trade-commission/ftc-halts-fake-garnis...

 

Message 4 of 9
llecs
Moderator Emeritus

Re: The Mafia probably has better APR%

Wow. Good find.

Message 5 of 9
GregB
Valued Contributor

Re: The Mafia probably has better APR%

If you think that is worse than a hard money loan from a loan shark, you need to do more research.

 

They are quite different, with this loan being one where the origination fee is removed from the proceeds up front but you pay interest on the entire amount and the loan is fully amortized.

 

The loan shark loan has no origination fee but FAR higher interest. If anyone was stupid enough to continue one of those on $5,000 for 84 months at the standard rate, the total paid would be $89,000.

 

The late payment issues and additional fees of both loans is where they both go from ugly to simply staggering.

Message 6 of 9
Uborrow-Upay
Valued Contributor

Re: The Mafia probably has better APR%

 

 

The mob does have better rates.  2% -5% vig (weekly) on the loan until paid in full.

 

At the 2% rate, you'd be saving 12.73% annually (if you were stupid enough (or desperate enough) to take a long term loan on any of these terms.

 

I'd call Tony Soprano first.

Message 7 of 9
Repo-ed
Senior Contributor

Re: The Mafia probably has better APR%

I did the math on that commercial a couple of weeks ago and I immediately felt bad for any/all so bad off, they have no other choice, but to take the loan.  Even a $2500 loan from them...

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Message 8 of 9
Oorah
New Contributor

Re: The Mafia probably has better APR%

This thread sparked my curiousity, so I did some checking on state laws for interest rate max on payday loans.  I was astonished to find that some states had reasonable laws, most allowed 400-500%, and Missouri law is an amazing 1980%.  I am shocked and amazed.  Imagine those who are down on their luck and can't read, or can't read english.  So sad that there are people in business to take advantage of those in dire straits.

 

http://www.credit.com/credit_information/credit_law/PaydayLoanLaws.jsp

 

 


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