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Thursday, September 16, 2010

Quick cash commercials

I've seen many commercials on TV lately guaranteeing cash advances which are short term loans up to $1000 within 24 hours with no credit check- just show a minimum monthly income of between $700-$800 depending on the company.  Of course in the fine print, it says "Under no circumstances will providing your information to this site guarantee that you will be approved for a short term loan". So not much of a 'guarantee' is it.  Anyways, I decided to investigate the company that Arsenio Hall endorses called MyMoneyPartner.  (Montell Williams endorses a similar competitor called MoneyMutual)

According to the website,  " together with Arsenio Hall will match you with the best short term loan provider that meets your needs."

Aww, how nice of Arsenio to take the time out of his busy schedule to do that for me. 

The real challenge was finding on the website what the financial terms were, including APR, interest, repayment schedule, etc..  It was so challenging to locate the information, the only way I could locate it was to keyword search specific terms on Google, then I found the link.   Now it seems this service is not offered in all states- only Delaware, Louisiana, Mississippi, Missouri, Utah & Wyoming.

So for curiosity, I looked at rates and terms specific to Louisiana.  From their page:
  • The minimum loan amount for Louisiana residents is $100.00
  • The maximum loan amount for Louisiana residents is $200.00
  • Loans will be issued in $50 increments.
Hmmm.. that's funny.. the ad emphasized $1000

Then it says " charges $20 per $100 borrowed. charges a daily rate therefore, APR will always be 521.43% regardless of the number of days outstanding."

APR of 521.43%?   Umm.. ~does a double take.. HUH?..  I mean...  HUH???

Then it gives its loan terms.. From their page:
  • Your loan will be due on your next payday that falls between 8 and 35 days away
  • If you are paid monthly, your loan will be due on your next payday that falls between 8 and 30 days away - If your payday falls outside of this range, your loan will be due in 14 days.
  • If you do not have direct deposit, will allow a one day grace period to deposit your check
In simple terms it means that your loan is due as early as 8 days after its lent

Now they provide a chart on the website to show how much interest you will be paying based on 521.43% interest.  If you took out a $200 cash advance and pay it back 8 days later, your interest is $22.88.   If you pay back in 14 days, its $40 and if it takes 30 days, the interest is $85.40.

Think about that..  $85.40 in Interest on a $200 loan that is repaid in 1 month!!   Let's compare to a normal credit card-- If you cash advanced off a Visa-M/C card at the Highest APR possible which is 30%, the interest on a $200 advance after 1 month is $5.

Out of curiosity I checked Delaware where the maximum borrowed can be $1000.  If you pay back the loan in 8 days, the interest is $171.44.  If it takes 14 days, the interest is $300.02.  And if you need 30 days to pay back the loan,  the interest on $1000 is $624.90...   That's Interest!!!    If you advanced $1000 on a 30% APR Visa-M/C and paid in full in 30 days, the interest is $25.

This is a good example of both the importance of saving money for a rainy day, and how the system takes advantage of people struggling to make ends meet and in desperate straits.   Arsenio and Montell should be ashamed of themselves.. but they're of course, they're not.

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