Legalized Loan Sharks.

[Callie Del Noire]

Okay.. I have warned enough airmen to watch out for these folks when I was in the navy..but I was watching the Western Sky ad (because they loop the damn thing twice again).. I spotted what looked to be 89.9% as the APR.. so I  went into the google net and looked it up

http://www.westernsky.com/General/Rates.aspx

All I can say is.. DAMN. Honestly guys.. Italian Americans whose names are like Vinnie and break limbs don't charge 385% for small sums.

Just damn..

[Oniya]

I know - at least when I was seeing the ad, they were saying 'Yes, the money's expensive'.  Or something like that.

[elone]

I have seen this ad and was appalled by the interest rate. Also in the small print is gives the dollar payback for a loan. Astronomical.

Does anyone know if they are exempt from any usury laws because they are located on a reservation, they stress that in the ad. I would assume they would not come under any state laws and not sure if there are federal laws that apply.

[Callie Del Noire]

I have seen this ad and was appalled by the interest rate. Also in the small print is gives the dollar payback for a loan. Astronomical.

Does anyone know if they are exempt from any usury laws because they are located on a reservation, they stress that in the ad. I would assume they would not come under any state laws and not sure if there are federal laws that apply.

Believe it or not, but they are about average for what the payday loan guys charge. You should have seen the chart my old CO put in front of congress once upon a time. He once said he wished he could ban these type of lenders from a 5 mile radius around base.

[Oniya]

There are some laws in place, but I don't know how they synch up with tribal laws/federal laws.

http://www.ncsl.org/issues-research/banking/payday-lending-state-statutes.aspx

[Beguile's Mistress]

I found the following link which is for an online legal help site.  It gives information regarding jurisdiction, etc.

http://www.justanswer.com/law/672m4-western-sky-claims-tribal-laws-loan-2600-sold.html

[Gadifriald]

It is friggin' scary that those Western Sky sharks charge way higher interest rates than your average street loan shark! I did the math one time after reading their number of payments times the payment amounts and listed what you'd end up paying below:

$850 loan product=$1728 repaid
$1500=$4756.32
$2600=$13839.62
$5075=$40872.72
And $10,000 borrowed from those sharks means you end up paying a total of $62453.16!

Then you look at the loan fees with $350 fee on a $500 loan and a $500 fee on a $1000 loan and you really see what kind of semilegal robbery they're pulling. Shit if you need money that bad go to your local loan shark who has lower interest rates! And to think my ancestors (Part Sioux!) didn't even understand the concept of money...

[RubySlippers]

Its not exactly immoral the rates are all on their site, people don't have to take out a loan and if they do its under the loan terms. But if you have issues you can take it into the Cheyanne Tribal Court system for challenge - good luck.

[Endorphin]

I'm not sure how it is in the US, but in Australia, the small loan industry (payday loans or advances, as we call them here) is regulated by things like an annual 48.5% cap on interest rates on loans in New South Wales and similar regulations in other states. One of the issues, however, is that some loan providers are quite crafty and come up with creative ways to achieve up to 500% p.a. by cycling through loans and deeming advances to be separate and not one single loan. Clever use of defining what is a loan fee, what is interest, what is an account fee and that kind of thing. Things that are not in the spirit of the legislation.

So, for those clients irresponsible enough to take out multiple 'advances' over the course of a year, the fees stack up each time. For instance, a client might borrow $500 and be required to pay back that initial advance plus $100 over three 'weekly' pay cycles. Yes, our pay cycles are quite flexible. Most are weekly or fortnightly. Well, if they were to do this once every 3 weeks (17x a year), that would amount to $1,700 in interest and fees on a recycled $500 loan, which is a cumulative 340% p.a. Plus the usual account fees, late fees, associated charges etc. There's not many places you can get that kind of ROI elsewhere.

But consumers are not that dumb, surely? Well, yes they are. I've seen it first-hand and I stay well away from the whole industry.

Definitely not enough consumer awareness in this area.