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Loan Sharks Not Welcome Here

Posted by Larry Doyle on March 5, 2009 3:49 PM |

In the midst of this economic turmoil in which many people are increasingly cash constrained, a cottage industry has developed which preys on the most vulnerable in our society. This industry facilitates short term loans in exchange for the borrower’s paycheck or tax refund. 

The companies that participate in this lending should not only be outed but they should also be prosecuted for this activity.

Bloomberg writes how More Americans Turn to Tax Refund Loans to Pay Monthly Bills. With implied rates of interest on these loans from 50% to 500%, this is loan sharking at its worst!!  Where are the Better Business Bureau and Attorney Generals when you really need them?  

The loans are expensive and unnecessary, said Chi Chi Wu, a staff attorney at the National Consumer Law Center. They promise taxpayers an advance on their refund in one to two days, while taxpayers can receive a refund at no cost within 15 days if they prepare their own returns and file electronically, Wu said.

Why does predatory lending like this develop? Very simply because people are uninformed and desperate. Who is looking out for these people?  Sense on Cents is ultimately all about helping people at all points on the learning curve become increasingly more educated about financial matters. 

While we roll out Sense on Cents, this story allows me the opportunity to highlight the link for Debt Management in the right sidebar. I am not a financial planner nor a consumer banker, but I can figure this out and the resources provided in the Debt Management section will hopefully put these loan sharks out of business. One does not need to be in such desperate straits to benefit from the wealth of educational resources in that link.

Let’s control our finances so they do not control us!! 


  • LD,

    I always hear you saying that one should spend within their means, and not let the finances control us. But, what if it is absolutely necessary taking out heavy loans to simply get through college. This is a heavy burden that one will have after college, and it certainly makes things hard when managing money knowing you are in deep debt to the school. What’s the best way to go about managing a situation like this?

  • Larry Doyle


    First off, it is critically important to review all financial costs before committing to a school. There are many great state programs with fabulous instruction that cost less than half of private schools. I firmly believe it is ultimately about the effort that goes in more than the name on the door that will determine ultimate success.

    One also has to totally avail themselves of all financial aid opportunities from the school, the government, and from private organizations. This is a lot of work and takes real time and effort but given that one’s future depends on it, it’s well worth it.

    One can also work one or two summer jobs and take a job during the school year to help defray expenses.

    After going through all that if you are still in the position of needing to take a loan out then in my opinion it is the BEST money you can ever spend because without an education opportunities are severely limited. Also, knowing that you have a financial stake in your education has to provide an added measure of motivation to do well.

    Hope this helps. Also our link in the right sidebar for Financial Aid should be able to provide some insights as well.

    I have always maintained, “if you think education is expensive, try ignorance…!!”

    • Thanks LD. I also checked out the “Career Planning” section of the website and it was VERY informative.

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