Have you seen the CashCall commercials with Gary Coleman, the little guy best known as Arnold on Different Strokes? It promotes a fast cash loan service that is just a phone call away [click on pic to view]:
What is a loan from CashCall going to cost you?
*MOUSE PRINT:
Just in case you can’t read that, it says the interest rate is 99.25%. On their website, sample interest rates are 24.58%, 59.46%, up to 99.25% depending on your state of residence and other factors.
At 99.25%, a $2600 loan would require you to pay back $9,095 over three and half years. That’s three and half times what was borrowed.
Fortunately, CashCall appears not to be able to make loans for residents of Iowa, Massachusetts, Nevada, New Jersey, New York, West Virginia and Wisconsin. What are the regulators in the other 43 states thinking?
I have to admit. I read 9.25%. Apparently, my mind didn’t want to believe 99,25%.
Hmmm, never mind the 99.25% apr, the fact the they used Gary Coleman as their spokesperson would have raised a red flag on me in the first place!
Strange as it seems, 99% actually looks pretty good compared with payday loan companies that charge 650% or more (see Wikipedia article on Payday Loan).
If you look at their website you will see that Cashcall only originates loans in a few states. The rest are underwritten by First Delaware bank. If you meet the lender’s underwriting criteria, you may get a loan. Chances are if you meet the criteria there you may as well apply at your local bank or credit union and get a much better rate. Most states do regulate finance companies and payday lenders. It is ultimately up to the consumer to use common sense when borrowing money.
The photo of Coleman seems to be very appropriate for this. He looks like his blindly stumbling about. You have to be such an idiot to accept any loan from Cash Outlets. I think one vendor, who was kicked out from doing business in North Carolina, were sticking the people who least afford it, with a 45% rate for fast payroll cash.
The fundemental problem is that there are people who can’t manage their money, and thus are not credit-worthy,
but insist on borrowing money. The informal credit market is outrageous, 99.25 is reasonable by comparison.
As a point of comparison, while in the California Conservation Corp, I was routinely hit up for loans and was
*offered* $20 gets you $40 at the end of the month (figure, 100%/two weeks, roughly 2600% APR, often with
colateral). This was not me out loan-sharking, people came to me and BEGGED me to do this. Unbelievably bad
financial sense! I can’t think of a way to fix this, other than not allowing such people access to their own
money.
99.25%? didn’t they used to call that loan-sharking?
When I first saw these ads, and Coleman talked about how they helped him out, I conjectured that he had bad debt problems and got these guys to help him out. when he couldn’t pay them back, they figured that maybe they can take advantage of this and take it out in trade for him doing TV commercials to sucker, um, persuade people into taking loans with them.
Always read the fine print, especially if the offer was not solicited by yourself. The best one I ever saw was a sweepstakes offer with the fine print in about no. 4 type (extremely small) printed in pale yellow ink on white paper. Apparently the promoter did not want it to be read and made it as difficult as possible. I wish I had kept it. It was a gem.
John P
@ Kyle: Correction – this has nothing to do with people having access to their OWN money. This has to do with giving people access to OTHER people’s money. Outlawing is simple. The government only has to set a maximum interest that a creditor can charge, as well as a maximum percentage that a creditor can tag on as ‘fees and services’.
In the Netherlands, the government recently reduced the maximum interest rate to prima + 14%. The motivation is that if people go bankrupt due to such outrageous deals, the government, and thus the people end up paying. So in stead of hanging massive burdens on folks who can’t deal with their finances, they made the business impossible. Some companies have gone out of business, pointing at government restrictions. The government simply put out a comparison of the cost of the unemployment benefits of the fired employees vs the cost of people going bankrupt. Guess what was cheaper.
Usury at its finest!
The first thing that I did (thanks to being a regular visitor to Mouseprint) was pause my DVR and read the “mouseprint” when I did the math I could not believe the outrageous apr. I agree that anything that all the red flags were there thanks again MP!
Had I been desperate enough to consider such a loan, the sight of gary Coleman would have warned me off before I ever got to the fine print! Someone whose word you can trust, right?
I recently did some work for a guy who owns a cash advance store. Something that he said shed a different light on the subject. He claimed that banks make most of their money on ‘fees’, like late fees and overdraft fees. In fact he claimed that someone was better off getting an advance from him than paying late fees to the bank–as long as they paid the money back as promised.
At first I was skeptical, but then started to think about Blockbuster Video who a few years ago had been busted on making more on late fees than on rentals. Maybe the guy was right and the banks do make most of their money of ‘fees’.
There was a time when most states, like California, had usury laws. It was a violation to charge more than 20% (maybe 30%). The banks changed that so they could charge 30% interest rates on credit cards.
Richard, it’s pretty well documented that banks make most of their money on fees.
However, like with the cash advance places, if you follow basic common sense and follow-through, you can avoid all of those fees.
For example, they make HUGE amounts on bounced checks, which are only applicable if you screw up on your spending. (Typically, anything else will be reimbused if you show that you were not at fault.)
They also charge fees for checking accounts…so ask for a no-fee account or go to a bank that doesn’t.
They also charge for account balances under a certain level. So either find a lower level or take your money out if it will continue to be that low (which is usually something like $500.) If your account is that low, a bank may not be your best choice for the money anyway…hmmm…mattress?
Credit unions tend to be better, but not usually by much. Again, use common sense and ask how you can avoid fees that just don’t seem reasonable (like charging you a fee to keep your money in their bank!)
The APR comes out to a little over 8% per month. That’s standard for payday loans. It is money for when you are in a jam. I have use this kind of service for just that.
Cash Call is an evil company that preys on the weak and stupid to make money. I recently began receiving phone
calls from these loan sharks about a friend of mine. They told me he owed them money and he defaulted on a
loan he took out with them. I told them why are you calling me, do you think I am going to pay you, the guy
actually asked me if I could and then collect the money from my friend. I told him to screw off and leave me
alone. I began getting more calls and a guy eventually told me if I did not cooperate that, “I would be
sorry.” Who the hell are these people, at one point I heard people laughing in the background and when I asked
for the supervisor I was told we dont have one. I hope Gary Coleman is so hard up that he will start working for
cash call as a door to door collector.
I agree that cash call is an evil company. In fact they are the worst creditor we have. About two years ago my husband and I were having a hard time a financially so I agreed to let my husband get a cash call loan. I thought he was only going get 1500 or 2500 but he got 5000. Our payments for almost 2 years are 250 a month which we pay every month and because our apr is 59% our overall balance has only went down 10 dollars in about 20 month. I didn’t know the apr was so high when my husband accepted the loan or I would have never let him take it out and i will never let him handle a loan by himself again i will comb over it with a magnifying glass first. Also the reason I say they are so evil is like so many other bloggs that I read they do harass you. We have never been late but when we moved we wanted to send in our payment instead of it coming out auto like it usually does they would not allow this and until we switched bank and they started getting it direct deposit again i received calls everyday ,every hour on the hour. One day i counted 12 calls. I told them the arrangement was being made by my husband and they would get their money and not call. They would not listen and kept calling even one week after the payment had been made. Hopefully we can save enough money now that we are doing much better and get rid of them faster I feel like the 250 we pay every month is just going in the toilet ,because our balance is not going down. I can’t wait to pay them off and get them out of our lives forever.
i borrowed 5000.00 from cash call and after two years and 3000.00 in payments still owed over 5000.00.i borrowed money from my retirement to get rid of them. ended up paying over 8000.00 on a 5000.00 loan,worst thing i’ve ever done.but i am so glad to have them off my back.
CashCall is just another open day roberry, can anyone please tell me why this type of business is allowed in California?
I just checked the website today (11/26/09) and now the APR is 139.34%, so on a loan for $2600.00 at $298.34 at 36 payments you would payback $10740.24 plus a $75.00 loan fee!!
I recently revisited CashCall to see if they had changed, and I found out that they did but not for the the better. At that interest rate now on borrowing $2600.00 is 139.24% you would have to pay back $10,761.84.
LEGAL DISCLAIMER: The APR for a typical loan of $2,600 is 139.24% with 36 monthly payments of $298.94. Credit approval is not guaranteed and is dependent upon underwriting guidelines. See our website or call us for complete disclosures. Some documentation required.
Approval not guaranteed and dependent upon underwriting guidelines. See website or call for complete APR, fees, and payment terms. Some documentation required. Loans made pursuant to Department of Corporations California Finance Lender Law License No. 603-8780
Illegal in NJ? So how are they lending in NJ & can they sue in NJ?