The other day, my son and I were watching TV and we saw an advertisement for a loan from Western Sky like the one below.
This advertisement offers $5,000 at only 116% interest. The advertisement we had seen offered $10,000 at $84% interest.
I understand that the ads do disclose the rates, and I’m sure there are a team of lawyers ensuring they will be able to collect their 84 payments of $743.49 from whoever borrows $10,000. (Yes, that’s $62,453.16 that must be repaid within 7 years!) But it still seems shady.
The “fine print” is hardly easily visible, and think about the person who is looking for an immediate loan of $10K. How likely is it that they can make payments of more than $700 a month.
It sparked a healthy discussion between my son and I about scrutinizing deals, reading fine print, and tangentially the Libertarian political party. He’s only 11, so I know he doesn’t fully understand it all, but if it makes him hesitate just a bit when he’s offered a deal to consider if it is what it appears at face value, then I’ll be happy.
But I still feel badly for anyone who doesn’t read the fine print or who turns to loans like these in hours of desperation. It seems like this is the kind of thing that the bank reform laws should have eliminated. Someone who borrows from companies like this is likely to be looking for assistance down the road. It’s business, I know, but it also seems exploitative.
Contributed by: Scott Copperman
Tags: By Scott Copperman