Tag Archives: Usury

Loan Sharking: Alive and Well

Posted on by The Old Wolf

loanshark

I recently had brought to my attention the existence of a company called “LoanMe,” which pre-qualified a redditor for a $10,600 loan at an APR of 99.75% with a $70,000 payback.

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I knew credit cards had outrageous interest rates of 18% and above, but I had no idea they were being outdone by orders of magnitude in the world of high finance.

Have a look at rates available in Utah from this company:

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This is from LoanMe’s own website – with the next column in red calculated out  by me and showing the total payoff.

For a $5,000 loan you’d be paying $36476.04 in interest over 7 years. For an even smaller loan of $2600, you would pay $15729.80 in interest over just shy of 4 years.

Predatory practices of this nature are incomprehensible; I thought we had laws against usury in this country, but I guess we don’t.

Be careful out there, and avoid those who would rob you in broad daylight under the loving protection of the law.

The Old Wolf has spoken.

 

Beware the Merchant Cash Advance

Posted on by The Old Wolf

small_business_cash_advance_loan_comparison_merchant-cash-advance-services

I had a missed call today from some number in Florida – I assumed it was from “Kelly from Credit Card Services,” since I get a couple of those each day (and I wish that our legislators could clamp down on these hqiz-eaters once and for all.)

This one was different, as I found out when I called the number back and got a recorded sales pitch.

The call came from 321-594-4796; a commenter over at 800Notes remarked,

Easy Funding d/b/a Easy Merchant Services of Melbourne, Florida — soliciting to advance credit card receipts (they loan money, charge an insane processing fee and interest, collect the loan+fees directly from your sales)

I had never heard of the Merchant Cash Advance ploy, but a quick search turned up this at Wikipedia:

“These merchant cash advances are not loans—rather, they are a sale of a portion of future credit and/or debit card sales. Therefore merchant cash advance companies claim that they are not bound by state usury laws that limit lenders from charging high interest rates. This technicality allows them to operate in a largely unregulated market and charge much higher interest rates than banks.”

In other words, another barely-legal scheme. The fact that my number is on the do-not-call list doesn’t matter, and that’s the first big red flag that a business is devoid of morals or ethics.

Watch out for such a scheme, it looks like a pretty poor way of generating operating capital for your business, much like using a payday lender or Cousin Luigi.

The Old Wolf has spoken.