A 60-year-old Navy veteran needed money fast. So he did what far too many people do in that situation and applied for a short-term “payday-type” loan. When all was said and done, he was charged well over 100 percent interest. Seriously. One major player in the industry offered a $2,600, 47-month loan, and sought a total repayment of $20,280.03! That’s a 204.94 percent annual percentage rate!
Most of us realize that short-term lenders make their nut on exorbitantly high interest rates, but states have systematically cracked down on these companies and capped the interest they’re allowed to charge. State regulators have had a good deal of success in recent years securing hefty settlements for citizens victimized under state usury laws.
But our Navy veteran friend wasn’t so lucky. He got his loans from the wrong companies, and the state Department of Banking had to tell him that they were powerless to assist him.
It’s hard to believe a company can so blatantly thumb its nose at the rules, but they have a secret and some Biglaw bigshots on retainer to fight tooth-and-nail to protect their lending practices….