So, let me get this straight, all I have to do is call and you’ll give me $5,000 for free?! Done and done!
Their “Legal Disclaimer” (in small text, of course):
“The APR for a typical loan of $5,075 is 116.73% with 84 monthly payments of $486.58, with a loan origination fee of $75. Individual loan terms such as the APR and any fee may vary and are dependent on the amount borrowed, the term and the borrower’s financial background. A loan will be renewed or automatically extended at maturity with the same terms unless the borrower pays off the loan balance [or Western Sky's renewal policy]. Any late or non-payment may adversely affect borrower’s creditworthiness, may result in borrower being subject to collections or being sued and will increase the outstanding balance due the accrual of late fees and any increase in the interest rate. Read and understand all loan agreement terms and conditions before borrowing. Credit approval is not guaranteed and is dependent upon underwriting guidelines. See our website or call us for any questions. Some documentation required.”
I just thought you might find this hilarious. And horrifying at the same time.
So, here are the totals:
$5,000 loan is $40,947.72 to payoff over 7 years.
When you look at the numbers, it’s obviously ridiculous, but some people live on these types of loans. I’ve seen them get stuck in the cycle of borrow, renew borrow, renew, and then borrow elsewhere to try and pay it off. It’s really an ugly cycle. When I look at payday loans, this is what I see: A “company”, loaning money, charging exorbitant interest rates and generally taking advantage of people who are already at the end of their rope. It’s sickening, really.
It’s ads like these which reminds me why I started here. I want help educate people to make better money decisions. In my opinion, taking out a payday loan is NEVER considered making a wise money decision, no matter how desperate you are. Getting charged over 100% interest to borrow money in advance of a payday is worse than just burning your paychecks before you cash them. You might as well pay your employer to work for them.
I don’t really have much more to say about this, the numbers speak for themselves. I want to know YOUR opinion on these types of loans.
Comments: Have you or anyone you know taken out a payday loan before? Do you find that they can be beneficial to anyone? How and when? Have you ever seen someone who has gotten stuck in the cycle of borrowing and then continually renewing these loans until the balance is just too much? Would you borrow $5,000 at this interest rate? Seems like a pretty good deal to me….
If you are someone who is looking for a payday loan, you don’t need one, you need a budget. Check out my budgeting basics series to get started, and feel free to hit me up at iheartbudgets :at: gmail .com with any questions.