Watch out for this “Personal Loan”
Due to COVID-19, there are a lot of people hurting financially. There are a lot of “loan sharks” preying on those people. They do it in the form of a personal check/loan that is sent in the mail. If times are hard enough, one might be tempted to cash the personal check for $5,000. It is a loan, and you can pay it back over time which seems easy/harmless enough. However, you may want to read the fine print before you exercise this “special offer.”
Here is what the small print says:
24.99% interest rate
You make 42 payments of $180.00. Total repayment of $7,560 on a $5,000 loan
You pay the loan company $100.00 for setting up this offer
IF you get a windfall and want to pay it back early, you owe the balance of the $7,560, not the balance of the original note of $5,000. You are on the hook for the entire loan plus interest whether you pay it back in 42 months or two months.
IF you are ever late with a payment, don’t expect grace. They can declare you to be in default. Then they can demand the balance owed as well as sue you in a court of law. In case of a disagreement or a claim, you waive your right to a jury trial. Instead, arbitration is your only option. Due to the attorney fees and the way arbitration works, it wouldn’t be an option for the vast majority of people.
IF you default on the note, you also agree to pay the attorney fees that the loan company accrues due to your case. People innocently agree to these horrible offers all of the time. Instead of reading and understanding the fine print, they just focus on whether they can make the payment. It is about time that Congress does something to shut this type of loan shark activity down.