Scary stories and fiendish tricks are all part of Halloween fun. But the last thing you expect is for those stories and tricks to be about your friendly lenders, bankers, and credit card companies.
Payday loans. You’re broke but payday is two weeks away. You write a personal check to the loan shark, uh … Payday Loan Company for $115 so you can borrow $100. The shark makes you sign a contract and agrees to hold the check until your next payday. In two weeks, the lender deposits the check or you can redeem the check by paying $115 in cash. But you’re as broke then as you were before so for $15 you can extend the loan for another two weeks.
In this example the cost of the initial loan is a $15 finance charge—or 391 percent interest! If you roll over the loan three times, the finance charge climbs to $60 to borrow $100 for six weeks!
These legal loan sharks (there are more than 10,000 payday loan outlets in business in the U.S., with thousands more on the Internet) are in the business of bleeding people for as much money as possible and then forcing them into bankruptcy.
Rent-to-own. It sounds like a great idea. You can’t afford new furniture and you don’t want to go into debt, so you decide to rent. You go to a local rent-to-own store and discover that after 78 weekly rental payments, you’ll own it—paid in full. Yes, it sounds great, but don’t believe it. Renting to own is a creepy way to throw your money away. Read more