Be Careful with Payday Loans Disguised as Good Loans (At 138% Interest!)

A commercial is in regular rotation on cable TV. It is a loan company that describes their consumer loans as a good deal

Be Careful with Payday Loans Disguised as Good Loans (At 138% Interest!)

A commercial is in regular rotation on cable TV. It is a loan company that describes their consumer loans as a good deal. The commercial goes as follows:

You don't want to settle for one of those pay day loans. You need a better option. Now you have a better options with easy monthly payments. You can borrow up to $5,000. You are in control. You can pay off the loan early if you would like."

Climb Higher with Avio Credit." (Some of the wording might not be identical - however, you get the idea)

So, here you have a credit company differentiating themselves from a payday loan company. By definition, the two main problems with a payday loan are the unbelievable interest rates coupled with the short-term of the loan. Why these types of predatory loans are still available are beyond me. If you read the fine print, which at best is confusing, the details tell you everything. It is a short-term loan with an interest rate of 138% if you were to hold it for a year. Oh, and if you can't make the payment, you can go online and change the duration of the payment while racking up even more high interest. This sounds just like a pay day loan to me. The problem is the advertising makes borrowing from Avio look harmless. This is far from harmless.

If a company is going to spend the enormous amount of money to produce a commercial and run it at cable TV rates, then they must be making some great profit. Of course, this means that millions of consumers are putting themselves at risk by borrowing this money. If this wasn't the case, this industry would not exist. Should these companies be allowed to exist? Should federal laws protect consumers from these types of predators or are companies like these providing a valuable service? Do these types of loans provide a consumer some time to get back into a good financial situation?

According to Open Secrets, during the 2016 election cycle, PayDay lenders gave almost 3 million dollars to political candidates. If you are a conservative, would it trouble you to know that the bulk of that money went to Republicans who gladly took it? We all know political contributions and politicians make strange bedfellows.

If someone is borrowing from a pay day type lender at triple digit interest rates, they are past the point of it being a problem. It has escalated into a financial crisis situation. Furthering the inevitable is not doing them any favors. I doubt that these types of loans are saving anyone from financial ruin. It is more like creating more of it!

Comments
No. 1-4
BobBrooks
BobBrooks

Editor

thanks @atkinsww1 - great article - wrote about it today

atkinsww1
atkinsww1

Interesting that the WaPo posted this yesterday:

BobBrooks
BobBrooks

Editor

@atkinsww1 - Yes, they seem untouchable by the politicians. To me it is a no brainer - you don't charge people triple digit interest rates who are already in financial trouble. Even the credit card companies are charging usuary type interest rates of mid 20 percentile - now there is an untouchable industry - the credit card industry -

atkinsww1
atkinsww1

Our church in Garland worked to get the payday lenders out of the city. But, like roaches, they just spread elsewhere. I am surprised that they are allowed to remain in business, but not surprised that most of their donations go to the GOP. Neither party is representing the interest of their citizens.

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