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This is Not a Payday Loan

Written by Nickel - 51 Comments

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This is Not a Payday Loan

Wow. While watching TV the other night, I saw an ad for a lending service that promised to put $2500 in my checking account overnight. There’s no collateral required, and no fees for early payoff.

Sounds good. Where do I sign up? Hmmm. On second thought, maybe we should check out the terms first.

Upon arrival at their website, I saw the following:

Application time less than five minutes! Not a payday loan!

Oh good, it’s not a payday loan. I’ve heard that those have high rates, so it’s probably best to avoid them. This, on the other hand… Well…

The woman in the commercial admitted that “the money is expensive,” but assured me that I can minimize my costs by paying it back as fast as possible. And besides, it’s not a payday loan, so it can’t be that bad. Can it?

Let’s take a look at the rates:

You can get a $2600 loan, which works out to $2525 after deducting the $75 “loan fee,” in return for just 36 monthly low monthly payments of $298.94. For the math impaired, that $2525 loan will cost you a total of $10761.84 (plus the $75 fee). That works out to an APR of 139.34%.

If you don’t need quite as much money, you can get a $1500 loan, which works out to $1000 after deducting the $500 “loan fee,” in return for just 24 low monthly payments of $166.95. In other words, that $1000 loan will cost you $4006.80 (plus the $500 fee). That works out to an APR of 194.70%.

But look on the bright side… At least it’s not a payday loan.

While I realize that there are extreme instances in which a short term, extremely high interest loan is preferable to the alternatives, it pains me to see these sorts of things being advertised on late night television knowing full well that their switchboards are lighting up. If they weren’t, they wouldn’t keep running the ads.

Published on January 14th, 2011 - 51 Comments
Filed under: Debt Reduction

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

Comments (scroll down to add your own):

  1. Wow, 140% to 200% in interest/fees is pretty ridiculous. You should call out the lending company by name, so people know to watch out for them.

    Comment by Anonymous — Jan 14th 2011 @ 9:40 am
  2. I think that’s the problem when something becomes a poster child for something negative. So as long as you aren’t taking out a payday loan, then you are ok. We need to teach people to evaluate every situation on its own – not just make blanket assumptions!

    It reminds me of when trans fats became the scapegoat for obesity. Now every item that you purchase announces that they don’t include trans fats – even if they never did!

    Comment by Anonymous — Jan 14th 2011 @ 10:12 am
  3. Is this the junk Montel Williams is hawking?

    Comment by Anonymous — Jan 14th 2011 @ 11:12 am
  4. I saw the exact same commercial. I had to replay it because I couldn’t believe she actually said “the money is expensive”.

    Comment by Anonymous — Jan 15th 2011 @ 12:13 am
  5. Oh brudder! If it walks like a duck, swims and quacks like one…’s a duck.

    Comment by Anonymous — Jan 15th 2011 @ 10:56 am
  6. These are very dangerous loans, but they are finally being upfront because of the new FTC guidelines for PayDay Loans, Weight Loss, etc.

    It would be wise to stay away from these types of loans but we all know that the market they are going after is currently suffering and they feel that these companies are doing them a favor by loaning them money when no bank or family will.

    Comment by Anonymous — Jan 15th 2011 @ 11:09 am
  7. It’s not a payday loan but it is predatory lending?

    Comment by Anonymous — Jan 15th 2011 @ 1:27 pm
  8. Well, I guess they feel okay about denying that it isn’t a payday loan because some of those are like 500% interest.

    Comment by Anonymous — Jan 15th 2011 @ 2:51 pm
  9. those commercials are the best! They have a stereotypical looking Native American and even call the company Red Sky or something similar lol

    Comment by Anonymous — Jan 15th 2011 @ 5:06 pm
  10. I have been caught up in these types od payday loans and title loans they all work the same and are hard to get rid of in fact I never pay them off just close the bank account from which they draft the funds and get another account. After 8 or more years of doing this I have finally come to realize that I will never have anything as long as I deal with companys like this. Hopefully this tax season I will Payoff the title loan I have at this time and that’s it, no more for me, by reading blogs like this and others I have found out how to save money for emergencies or things I really want or need verses getting these high priced loans.

    Comment by Anonymous — Jan 16th 2011 @ 10:43 am
  11. Wow! That’s an insane amount of money to be paying back, nearly 4 times what you’ve received! The sad thing is, there’s probably a ton of people that jumped at the “opportunity”.

    There are really going to be some poor folks in 10 years. I’ll have $100,000 by then, and I’m going to feel like Mr. Monopoly! ๐Ÿ™‚

    Comment by Anonymous — Jan 17th 2011 @ 7:10 am
  12. Of course these interest rates are outrageous; of course one would have to be dumb or desperate to take one of these loans…
    BUT…I wonder what the default rate is on these loans. It seems to me that they are very high risk loans. Should any company participate in these high risk loans without charging a high interest rate? If they did, would they be able to remain in business long?

    To my thinking “life is tough and life is tougher when you are stupid”. There will always be people who will partake in these loan scams. As long as the interest rate and payback is disclosed prominently and in plain language, these services should be allowed to exist. Not that I am in any way condoning them.

    Comment by Anonymous — Jan 17th 2011 @ 10:32 am
  13. Here in the UK we get TV adverts for loans with an APR of 2970%
    No I didn’t get that wrong. They have it in the very fine print at the bottom.

    Comment by Anonymous — Jan 18th 2011 @ 11:39 am
  14. I love that commercial! The spokeswoman, Kylie, is absolutely STUNNING! ;-()

    Comment by Anonymous — Aug 18th 2011 @ 3:02 pm
  15. What other options do the working class have? If you are living pay check to pay check & unable to save. If you have another option, please share with the working class.

    Comment by Anonymous — Dec 30th 2011 @ 10:27 pm
  16. Each situation is different, but the two obvious options would be to spend less or earn more. Do both if you can make the sacrifice. I realize some people are not making their needs each month, so that’s an income problem that needs to be addressed.

    Comment by Anonymous — Dec 31st 2011 @ 1:12 am
  17. i am looking for a 400.00 loan not a payday loan want to pay back by thwe month

    Comment by Anonymous — Apr 7th 2012 @ 12:04 pm
  18. where can i find a web site that borrows 400.oo on a monthly payback

    Comment by Anonymous — Apr 7th 2012 @ 12:06 pm
  19. waitibng for an answer to my que3stion

    Comment by Anonymous — Apr 7th 2012 @ 12:07 pm
  20. no comment

    Comment by Anonymous — Apr 9th 2012 @ 2:34 pm
  21. where is my answer to the question

    Comment by Anonymous — Apr 9th 2012 @ 2:35 pm
  22. I saw this commercial on television not too long ago and was appalled — not only at the amount of interest and the amount you would have to pay back — but also because it seemed to target the already economically depressed American Indian. The woman was American Indian-looking, the background looked like the plains, and even the name of the company (which I can’t recall) was American Indican-sounding. I haven’t seen it in a while and was wondering if it had been taken off the air? Does anyone know?

    Comment by Anonymous — May 8th 2012 @ 9:45 am
  23. Yes, Patti, I have seen the commercial as recently as this week. In tiny mice print, it cites an unbelievable interest rate. It appears that they money is loaned through an indian tribe, which may exempt them from some usury laws. BTW, about usury laws, ever notice how so many credit card companies incorporate in Delaware ? It is to escape States’ usury laws, since the US supreme court has ruled that it is the home state of the company that controls interest rates.

    Comment by Anonymous — May 9th 2012 @ 8:02 am
  24. So where can a person go to get a fair loan rate? I made some mistakes and destroyed my credit but even the banks did that and they got bailed out by us. So now no bank institute will help me out. I just want a chance to prove I am responsable now .wheres my bail out or second chance ? Im forced to consider a payday loan rip off. how dose that help me prove anything .even the dam bank my pay check goes in every week denied me. and they wonder why people are pissed off its degradeing .they point there nose in the air and nicely say move aside asshole. NEXT!

    Comment by Anonymous — Jun 6th 2012 @ 5:58 pm
  25. Sorry, Frank,
    You clearly seem to be high risk as you have “destroyed” your credit–this suggests repeated “mistakes” with your finances and credit–and each time you likely promised to be more responsible and then failed. If you want a better record, make one. Consider a secured credit card, use it responsibly and pay as agreed. A “fair” loan rate is one that accurately reflects the risk to the borrower. You seem to be high risk at this time.

    Comment by Anonymous — Jun 6th 2012 @ 8:17 pm
  26. Wow…How amazing…I bet people who are unfamiliar with this country, but do browse online, believe that there are no poor/below the poverty line people in this country. In every forum/editorial, discussion, etc that I have read; poor people are never mentioned/spoken of with compassion or just simple understanding, as the ‘working class’ (who are now having to use many of the same programs/assistance poor people have had to utilize for so long).

    I’m curious to know if some, if any, realize just how hard it is to survive; live; do well, when utilizing these assistance programs; or when living on an extremely fixed income? I’m sure there many ‘working class’ people who understand just how very hard it really is, now. Many poor people worked, once upon a time. Just wondering?

    Comment by Anonymous — Jul 29th 2012 @ 9:36 pm
  27. Comment to Twins:
    Most of the “poor” in this country cannot compare with the poor in other countries. So many of the “poor” in this country receive food stamps, have cell phones (many for free), have big screen televisions and other accoutrements, yet are considered poor in this country. While there are situations of heartbreaking bad luck that deserve a hand up, there are also many more instances of poverty that can be attributed to bad decisions made in life. This includes many former middle class people who lived large while times were good and incorrectly thinking that the good times would last forever, lost everything when the tide turned on them. Life isn’t fair–it is up to you to prepare for the possibilities of difficult times. If you do not, you do not have the right to take from someone else who worked hard and made the right decisions. The postings here often cite people who ruined their credit by repeatedly making bad decisions, and yet they lament that no one will loan them money except at high rates. Rates reflect risk, and risk reflects what one has done in the past.

    Comment by Anonymous — Jul 30th 2012 @ 9:13 am
  28. Unfortunately Steve, there are many who are poverty stricken all over this planet, including the US, due to no FAULT of their own. But, I won’t try to speak to what is not familiar to me. I can only speak to what I’ve either witnessed/experienced myself. It is so easy (for some) to generalize and lump people together, regardless of their true circumstances.

    In fact it was not my intention to comment on anything about not being able to get a loan…For example, there are people in this world that are forced to retire due to disability. When a person has worked let’s say 23 years and suddenly can no longer work, and must adjust to:

    A) Not working at all (believe me that is quite an adjustment, especially when you love your work); B) Then to have to try to survive with a considerable change in income, that is a devstating prospect.

    Now, I do agree that there are those who may make bad decisions, but there are also those who are honest, hard working folk, (whose job was basically their ‘second home’), who are living a much different life, due to something not in their control (like health, for instance).

    The one thing that I have learned in my 55 yrs of life is that people, even those who are not Americans, will try to survive any way possible. There are people in this country who are surving/living in much the same way (literally) as those you spoke of in other countries…You just don’t seem to be aware of it.

    Comment by Anonymous — Aug 1st 2012 @ 1:01 pm
  29. I worked in Social services for many years and can say this: There ARE heartbreaking cases where a person does everything right and still faces catastrophe. BUT, there are many MORE cases where the situation is caused by poor decision making. I am sorry for your disability. I have seen many, many cases where all was going well and disaster struck from an accident or an illness–life is not fair. In my case, I purchased disability insurance–it was not really expensive and a prudent thing to have since things do happen. Is it a bad decision to NOT purchase disability insurance ? You will have to answer that, but many of the people in trouble would have had an easier time if they had.
    Most, after becoming ill or disabled were looking at homelessness after as little as 2 weeks. Should they have spent less and saved more when they were working ? For many the answer was yes. Should they have stayed in school to have gotten a better job ? Should they have not gotten pregnant and now have a baby to raise when they could barely support themselves before (this is a large predictor of female poverty)?

    Comment by Anonymous — Aug 2nd 2012 @ 9:17 am
  30. How DARE that cheeky Native American woman come on TV and try to rob you right of your personal property..And how DARE she trick you into signing that legally-binding agreement that you didn’t understand until it was too late…Oh, the HORROR!……

    Look, folks…If you’re dumb enough to consider a payday or high-interest loan in the first place, I just don’t know what else I can say. Except (perhaps), that there are plenty of legitimate lenders out there who are more than willing to work with you, even if you happen to have less than perfect credit. Providing that you’re willing to do a little research. ๐Ÿ˜‰

    Comment by Anonymous — Sep 24th 2012 @ 11:11 am
  31. Hmm please do share these legitimate lenders out there who are “more than willing” to work with people with bad credit. Because quite frankly…I have yet to find one…perhaps I’m just awful at doing research. ๐Ÿ˜‰

    Comment by Anonymous — Oct 2nd 2012 @ 8:16 pm
  32. Don’t confuse “need” with a want… You don’t need to do a lot of things like buy presents…

    Comment by Anonymous — Nov 29th 2012 @ 3:19 pm
  33. Here’s a big part of the problem….us!

    Speaking of education, I am hosting a 17 year old high school student from China. The study habits and organization of her here is beyond exceptional. The Chinese teach their children how to study and continue to reinforce that lesson, we don’t. Even having to cope with English as a second language she is getting straight A’s. When she does math (calc) she does it long hand only using a calculator to do the grafting as calculators are not allowed to be used in China school so the students understand the theory on how to solve the problem vs just getting the solution. THe start school at 8 am and are not finished until 5 pm. When you look at our education system and the lack of parental responsibility, we are such a joke! In the end, the joke is already on us!

    Comment by Anonymous — Dec 12th 2012 @ 12:30 pm
  34. Len,

    Once they know all that math, what are they going to do with it?

    Seriously. All I hear is that we lag the world in math and science. But all these countries that have the best math and science students make cheap and hazardous crap for export.

    Comment by Anonymous — Dec 19th 2012 @ 3:17 pm
  35. What will they do with it? Last year China filed for more patents then the U.S. If the U.S. doesn’t get it’s debt problem resolved we will soon be a third world country and we’ll be fortunate to make the “cheap and hazardous crap for export”.

    Comment by Anonymous — Dec 23rd 2012 @ 10:47 pm
  36. Need to borrow a small amount so I can go home and come back to where I live now. I guess it will be 1500.00 What do I need to do??

    Comment by Anonymous — Mar 18th 2013 @ 8:05 pm
  37. WOW! I can’t believe some of the bs thats been said. Steve, I’m high risk cause of a student loan, I’m high risk cause I’m an under 40 divorced white female. And don’t blame the bloody native americans. I’ve been trying trying to get a loan for a minute now. I had some deviant steal about
    17000 from my account. You know that little thing called Indentity theft. Who by the way was an illegal. I worked and became disabled after a car accident. I worked hard to save what little bit I could. I’ve paid my bills all my life and cause of a student loan I can’t get another. Payday loans are a joke! And do you know who calls me about that? People who are from the middle east. Who claim their names are John and Henry. I have about 1500 in bills that I can’t pay cause of the illegal who sent my money home. I can’t get any kind of loan because I’m on disability. I’ve done my research. Everyday I try to find some place that will lend me money. Why don’t you make a post of lenders that will help people like us. There’s something maybe you should consider.

    Comment by Anonymous — Mar 27th 2013 @ 12:39 pm
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    Comment by Anonymous — May 15th 2013 @ 9:35 pm
  40. Well, Shades, I am sorry for your predicament. As to your student loan situation, perhaps you should not have taken out so much student loans. Speaking for myself, I worked my way through law school and a masters degree, so that I would not have any student loans to repay. If you cannot repay your student loans, why would any lender assume that you can repay their loan?
    The might be some place that would loan you money, Shades, but you are high risk in repayment, and the interest would be high.

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  48. My name Hawkins, i am from California USA, married, i have been searching for a genuine loan company for the past 3 years and all i got was bunch of scams who made me to trust them and at the end of the day, the took all my money and left me moneyless, all my hope was lost, i got confused and frustrated, i lost my job and find it very difficult to feed my family, i never wanted to do anything will loan companies on net anymore, so went to borrow some money from a friend, i told him all that happened and he said he can help me, that he knows a loan company that can help me, that he just got a loan from them, he directed me on how to apply for the loan, i did as he told me, i applied, i never believed but i tried and to my surprise i got the loan in 24 hours, i could not believe my eyes, i am happy and rich today and i am thanking God that such loan companies like this still exist upon this fraud stars all over the places, please i advise everyone out there who are in need of loan to go for Mr.David M. Shelton By Email [email protected] , they will never fails, your life shall change as mine did.

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  50. Well, the people are desperate and stupid to get a payday loan. These people suck u dry and you still have nothing and you don’t get ahead. It is a shame you are punished with quadrupple inserts rates. You don’t get ahead at all. These company are ignorant and don’t give a rats ads about you getting ahead. APLEASE DONT BE SOOOO STUPID!!

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