Is CashCall excessively predatory?

Pi1otguy

Pi1otguy

En-Route
Joined
Oct 24, 2007
Messages
2,519
Location
Fontana, CA
Display Name
Fox McCloud
Home Airfield
KRAL
One of my friends ended up taking a loan from CashCall and quite predicatably couldn't pay it off the next month and ended up making monthly payments. I looked it over after the fact and found it's financed at 138% APR over several years!

I've never heard of such rates. I thought the max allowable was ~99.25%.

Given the fact that a sizeable chunk of their customers will not pay in full in 30 days are they excessively predatory? Is it better to pay 138% APR or just go belly up and deal with the consequences?
 
A good predator knows they must either get the drop on the prey or they are in for a chase.

The fine print prevents them from getting the drop; the high rate makes the chase worthwhile.

Sad state of affairs, eh?
 
Of course it is, the banking industry burned through the real estate market an now they're after the future potential earnings of the newly homeless and unemployed. Amazing all the predatory loan spam I get.
 
Cash Call = run like hell. I would never deal with those predatory buffoons.
 
Pi1otguy said:
excessively predatory
Click to expand...

I don't understand this term. CashCall isn't going door to door asking to loan money. They loan money to people who go to them with no collateral and probably a poor credit history. If one doesn't agree with their terms then they don't have to borrow money from them.
 
Pi1otguy said:
Is it better to pay 138% APR or just go belly up and deal with the consequences?
Click to expand...

If your friend doesn't pat the vig, does someone whose middle name is "The" show up at the door with an accountant named "Knuckles"?
 
How is this worse then the ATM fee scam of charging more then 20% to get your own money out of the machine?
 
CashCall actually operates inside of the California law as predatory as their rates/fees may seem. The real scary ones are the ones that are exploiting the sovereign nation status of the indian nations (western sky) which have no limits at all.
 
"Excessively Predatory" is redundant when dealing with these types of companies.

As for the Native American companies, you referring to the one that's advertising on TV all the time?

"WESTERN SKY FINANCIAL is owned wholly by an individual Tribal Member of the Cheyenne River Sioux Tribe and is not owned or operated by the Cheyenne River Sioux Tribe or any of its political subdivisions. WESTERN SKY FINANCIAL is a Native American business operating within the exterior boundaries of the Cheyenne River Sioux Reservation,"

Loan Proceeds Fee APR # of Pmts Monthly Amt
$10,000 $9,925 $75 89.68% 84 $743.49
$850 $500 $350 342.86% 12 $150.72

In other words, if you borrow $10K and use the entire time to repay, you'll pay $52.5K in interest.
 
Last edited:
flyingron said:
CashCall actually operates inside of the California law as predatory as their rates/fees may seem. The real scary ones are the ones that are exploiting the sovereign nation status of the indian nations (western sky) which have no limits at all.
Click to expand...

More correctly, sovereign States. Tribal entities still have to comply with Federal law, just not State and Local law. And for that matter, Federal tribal regulators tend to hold tribes to State standards on matters within their jurisdiction.
 
I usually respond to such questions by asking if taking high interest rate unsecured loans is "excessively stupid".

You're allowed to be as willfully ignorant about life as you like here in America. You also get the freedom to learn from your mistakes.
 
MadseasoN said:
I don't understand this term. CashCall isn't going door to door asking to loan money. They loan money to people who go to them with no collateral and probably a poor credit history. If one doesn't agree with their terms then they don't have to borrow money from them.
Click to expand...

No, they and others bombard me with offers of $1000, $1500... "Gauranteed Cash Today!!!" There are several of the emails every day for the last 2 years. It's the same thing they did to the housing market by calling every day at dinner time offering refi at $125% appraisal value and sending crooked appraisers writing high values.
 
jhausch said:
The fine print prevents them from getting the drop; the high rate makes the chase worthwhile.

Sad state of affairs, eh?
Click to expand...

No one reads fine print. Or at least I assume that's the case when people stare at me oddly when I read instead of blindly signing stuff.

MadseasoN said:
I don't understand this term. CashCall isn't going door to door asking to loan money. They loan money to people who go to them with no collateral and probably a poor credit history. If one doesn't agree with their terms then they don't have to borrow money from them.
Click to expand...
It's predatory because they market to those with virtually no other option and push them into loans that they know are hard to service. At the point people take these loans the options are typically take the loan and hope or go bust now.

Basically, it'd be like a pilot without an IR getting stuck on top with minimum fuel. Sure he shouldn't descend & attempt an approach through IMC, but it's a rock & a hard place at that point.

Also, at that APR and term interest accures at ~$10 per day. A missed or late payment makes the loan significantly harder to ever payback.
 
Pi1otguy said:
No one reads fine print. Or at least I assume that's the case when people stare at me oddly when I read instead of blindly signing stuff.
Click to expand...

My favorite is "Sorry, forgot my glasses, I'm gonna need you to read me all that fine print there."
 
I like the term a well known personality from Tennesee uses to describe this industry: Legalized Loan Sharks.
 
AggieMike88 said:
I like the term a well known personality from Tennesee uses to describe this industry: Legalized Loan Sharks.
Click to expand...

I always thought the Rent to Own places were a ripoff, but these guys? Holy crap. Back in the day I remember to corner liquor store was who everybody used to float checks, Bob didn't even charge interest.
 
Pi1otguy said:
No one reads fine print. Or at least I assume that's the case when people stare at me oddly when I read instead of blindly signing stuff.


It's predatory because they market to those with virtually no other option and push them into loans that they know are hard to service. At the point people take these loans the options are typically take the loan and hope or go bust now.
Click to expand...

So the alternative for people with 'no other option' is to not loan them the money? They might turn to crime or just go without. Which is better?

This lender is loaning money to people with no credit and no collateral who are down on their luck and need cash fast. These are risky loans that probably will be defaulted on. So the lender needs to get as much of that money back asap. That's the reason for the high interest.

Would you loan money to someone like that at a 10% interest rate? You wouldn't be in business long if you did.
 
MadseasoN said:
So the alternative for people with 'no other option' is to not loan them the money? They might turn to crime or just go without. Which is better?

This lender is loaning money to people with no credit and no collateral who are down on their luck and need cash fast. These are risky loans that probably will be defaulted on. So the lender needs to get as much of that money back asap. That's the reason for the high interest.

Would you loan money to someone like that at a 10% interest rate? You wouldn't be in business long if you did.
Click to expand...

But the terms are nearly as unsustainable too. Essentially, this is an egregious example of the "poor tax".

I know that these are lenders of last resort cause the fine print explicitly advises the borrower to check if they can qualify for other lenders. What I don't get is that unless it's a situation that resolves in 30 days the payments become another stress in an already bad situation. Pretty much a person is on the verge of bankruptcy when taking this type of loan. Maybe it would be better to go Chap 7 or 11 earlier instead of limping along under an onerous debt load for several months on the way to Chap 7 or 11 anyways.
 
MadseasoN said:
So the alternative for people with 'no other option' is to not loan them the money? They might turn to crime or just go without. Which is better?

This lender is loaning money to people with no credit and no collateral who are down on their luck and need cash fast. These are risky loans that probably will be defaulted on. So the lender needs to get as much of that money back asap. That's the reason for the high interest.

Would you loan money to someone like that at a 10% interest rate? You wouldn't be in business long if you did.
Click to expand...


How does this prevent them from becoming criminals when they now owe more money with people coming after them for it?
 
Pi1otguy said:
But the terms are nearly as unsustainable too. Essentially, this is an egregious example of the "poor tax".

I know that these are lenders of last resort cause the fine print explicitly advises the borrower to check if they can qualify for other lenders. What I don't get is that unless it's a situation that resolves in 30 days the payments become another stress in an already bad situation. Pretty much a person is on the verge of bankruptcy when taking this type of loan. Maybe it would be better to go Chap 7 or 11 earlier instead of limping along under an onerous debt load for several months on the way to Chap 7 or 11 anyways.
Click to expand...

Maybe it wouldn't and maybe the problem wil resolve in 30 days, who knows. The state of MT voted them out of business so the do gooders there removed the option. But, the local Native reservations are enjoying the results of that vote. Meanwhile the buildings they were in support a never ending stream of failing resturant endeavors.
 
Rusty, I get your point though. The problem (as demonstrated by the mortgage meltdown) is that contrary to my pre-2009 opinion, there are large groups of people who will engage in fiscally dangerous behavior. Even worse is that they are large enough to screw over those who followed rules and endanger the entire system.
 
Sac Arrow said:
More correctly, sovereign States. Tribal entities still have to comply with Federal law, just not State and Local law. And for that matter, Federal tribal regulators tend to hold tribes to State standards on matters within their jurisdiction.
Click to expand...

Usury laws are are a state thing.
 
I haven't dealt with loan sharks (of the "Guido" variety) in many years. But when I did, it was pretty typical that the total paid back on a loan that was paid on-time would be exactly double the amount borrowed. Half of every payment went toward the principle, and the other half was interest.

That made for a very high interest rate because of the short terms, but in terms of actual dollars you were still paying back twice what you borrowed. That's actually less than what many consumers with less-than-wonderful credit pay back on bank loans nowadays, and much less than what they'll pay back to payday loan companies. So the loan shark may actually be a better deal.

The difference, of course, is the collection methodology employed if the debtor falls behind. Guido may send someone to break your legs, while a bank or payday loan company will merely destroy you financially.

-Rich
 
RJM62 said:
I haven't dealt with loan sharks (of the "Guido" variety) in many years. But when I did, it was pretty typical that the total paid back on a loan that was paid on-time would be exactly double the amount borrowed. Half of every payment went toward the principle, and the other half was interest.

That made for a very high interest rate because of the short terms, but in terms of actual dollars you were still paying back twice what you borrowed. That's actually less than what many consumers with less-than-wonderful credit pay back on bank loans nowadays, and much less than what they'll pay back to payday loan companies. So the loan shark may actually be a better deal.

The difference, of course, is the collection methodology employed if the debtor falls behind. Guido may send someone to break your legs, while a bank or payday loan company will merely destroy you financially.

-Rich
Click to expand...

Depends on who's running the Payday Loan company....;)
 
RJM62 said:
I haven't dealt with loan sharks (of the "Guido" variety) in many years. But when I did, it was pretty typical that the total paid back on a loan that was paid on-time would be exactly double the amount borrowed. Half of every payment went toward the principle, and the other half was interest.

That made for a very high interest rate because of the short terms, but in terms of actual dollars you were still paying back twice what you borrowed. That's actually less than what many consumers with less-than-wonderful credit pay back on bank loans nowadays, and much less than what they'll pay back to payday loan companies. So the loan shark may actually be a better deal.

-Rich
Click to expand...
If my friend took the whole term to pay it off it would be over 5 times the original loan, plus they have a clause allowing them to make unlimited credit inquiries during the loan. To me it sounds like an attempt to artificially depress credit scores of the victims borrowers.
 
Henning said:
My favorite is "Sorry, forgot my glasses, I'm gonna need you to read me all that fine print there."
Click to expand...

I will have to remember that one for the closing next time I take out a home mortgage, which probably will not happen again but if it does.............

Cheers
 
Pi1otguy said:
If my friend took the whole term to pay it off it would be over 5 times the original loan, plus they have a clause allowing them to make unlimited credit inquiries during the loan. To me it sounds like an attempt to artificially depress credit scores of the victims borrowers.
Click to expand...

The credit report clause is probably to track the people if they don't pay.:eek:
These places charge huge interest rates on usually pretty small loans, they are very profitable % wise, but usually it's still small dollar amounts. Like if we sell a $2.00 part for $4.00 great % return, but it takes a lot of $4.00 sales to pay the bills. Now a couple $2500.00 transmissions at 10% makes money. :yes:
I'm not really defending these guys, it's a crappy business, but there is a demand or they would go out of business. :dunno: It's an extension of the buy here pay here car sales business, you pay more because you're a high risk and nobody else will loan you the money.:rolleyes:
 
You must log in or register to reply here.
Back
Top