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!!