Lending Club Blog

Miserably bad deals

Companies love to make money. Unfortunately, not all of them have good consciences, or you wouldn’t see ads like the following on TV: http://www.youtube.com/watch?v=JJMS5OrdAcg. Hey, it’s Gary Coleman! And he’s offering a nice service to people who need money, right? Not quite — look closely at the fine print. The loans he is pitching charge an Annual Percentage Rate (APR) of 99.25%!

What does this interest rate mean? Well, the terms state that a typical loan for $2,600 is 99.25% with 42 payments of $216.55. That comes out to more than $9,000 dollars over three and a half years. In other words, someone who takes this loan pays well over three times what he or she borrows.

Offers like this are designed to prey on consumers who don’t know better. This ad is often shown in the daytime, when the viewers are predominantly people who don’t have jobs — people who already have a hard time paying for what they have. By offering these high-interest loans, the company is essentially offering a fast track to insurmountable debt.

One other type of company springs to mind after seeing this ad — rent-to-own companies, such as Rent-A-Center. These companies rent furniture and electronics to consumers at incredibly high rates, and then offer to sell them the items at an increased price. A recent article on AllFinancialMatters did an analysis of how these stores operate and found that, for a single piece of furniture, Rent-A-Center was charging a 122% APR.

Companies “offer” deals like these because consumers take them. Many of the people who rent furniture or take high-interest loans have to take them because they don’t have any credit, and they have no other way to get money. Still, there is always a way to save your credit.

We here at Lending Club urge you to be careful of high-interest deals. Otherwise, you might find yourself in serious debt and unable to get out of it.

Friday, August 10th, 2007 at 10:17 am

Comments (0)

Recommended

5 Ways to Get Your Finances Ready for the Holidays

How to Build a Budget: Part 1

The State of Debt: 2016

Types of Loans 101

See more
Lending Club Awards
  • Archives z

Recent Posts

5 Ways to Get Your Finances Ready for the Holidays

Read More »
December 1, 2016

How to Build a Budget: Part 1

Living on a budget. It can sound scary, right?… Read More »
November 21, 2016

Five Signs Your Business Needs Capital

Knowing when your business needs working capital— and promptly… Read More »
November 10, 2016

How does a car refinance loan work?

Whether your goal is to lower your monthly car… Read More »
November 2, 2016

Are you paying too much for your auto loan?

How refinancing your auto loan with a better rate… Read More »
October 25, 2016

The State of Debt: 2016

Politics can be a divisive topic, where issues and… Read More »
October 24, 2016

Lending Club Teams Up with United MileagePlus® to Offer Customers More

  When it comes to… Read More »
October 21, 2016

Patrick Dunne: A Message to Investors

I wanted to take a moment to introduce myself… Read More »
September 29, 2016

Line of Credit vs. Loan

Lines of credit (LOCs) and small business term loans… Read More »
September 28, 2016

Types of Loans 101

There are many types of loans out there and… Read More »
September 16, 2016

2014

We went public today!

Ringing the bell this morning at the New York… Read More »
December 11, 2014

New and Improved Statistics Page

We recently redesigned our Loan Statistics page to make… Read More »
November 13, 2014

Lending Club Honored with Economist Innovation Award

This month I was honored… Read More »
October 15, 2014

Welcome Vermont Investors!

Today, we’re thrilled to welcome residents of the state… Read More »
September 4, 2014

We filed to go public today

We filed a registration statement with the SEC today… Read More »
August 27, 2014

Our Billion Dollar Quarter

We’re excited to announce  that we’ve facilitated over $5… Read More »
July 8, 2014

Is Lending Club Available in My State?

Is Lending Club available in my state? That is… Read More »
July 7, 2014

Lending Club Joins Senator Cory Booker to Discuss Improving Access to Capital for Small Businesses

Read More »
June 20, 2014

Lending Club Named a CNBC Top 50 Disruptor for a Second Year

For the second year in… Read More »
June 17, 2014

PRIME is now Automated Investing

Lending Club is excited to announce that PRIME has… Read More »
May 14, 2014
View All w