Gary Coleman Pitches Outrageous 99.25% APR Loans
Published on - July 10th, 2007 (Modified on - July 13th, 2007) (by J.D. Roth) You guys are awesome. I’m scrambling to get things organized before I leave for London this weekend, and GRS readers continue to send me great story ideas and guest entries. I won’t get to all of them before I leave (not even close!), but you’ve given me lots of fodder for when I return.
Here’s one I can’t pass up, though. Two readers — Jeremiah and Matt — sent me the exact same story, and both included photos to go with it. It seems that lovable rascal, Gary Coleman, has found a way to recover from bankruptcy. He’s pitching outrageous loans to people who don’t know better.
Whatchoo talkin’ ’bout, Willis?
I haven’t seen the commercial myself, but with the help of modern technology, we’re able to examine the gory details:
I know that fine print may be difficult to read, so I’ve transcribed it for you:
(877) 890-CASH
CashCall.com 24/7
Hablamos EspañolThe APR for a typical loan of $2,600 is 99.25% with 42 monthly payments of $216.55. Credit approval is not guaranteed and depends on the lender’s credit standards. Complete disclosure of APR, fees, and payment terms available on request. Limited documentation required. California loans will be made pursuant to CashCall’s California Department of Corporations Finance Lender License No. 603-8780. Idaho Department of Finance Regulated Lender License 4428. Nevada Department of Business & Industry Installment Loan License NO. IL05343. New Mexico Small Loan License No. 01285. Loans in all other states will be made by First Bank of Delaware (Member FDIC).
“I don’t know why they didn’t just go all the way up to 100%,” Jeremiah writes in his e-mail. Neither do I, but I’ll bet that there’s some legal clause that defines 100% APR as usurious. As if 99.25% is any better. On a lark, Matt actually tried to go through the application process after he saw the commercial, but he was out of luck (or maybe that’s “in luck”). His home state isn’t eligible:
I decided to see how much a borrower would pay for the “typical loan” from the fine print — $2,600 at 99.25% for 42 months. The Bankrate loan calculator won’t take interest rates over 99%, so that’s what I’ve used. Close enough. After three-and-a-half years, the borrower would have repaid the $2,600 principal and $6,743.61 in interest. That’s more than two-and-a-half times the loan amount.
How can the people who own CashCall sleep at night? Just because you can find suckers to borrow money at rates like this doesn’t mean you should loan them the money. Ultimately, however, the responsibility rests with those who borrow money at these exorbitant rates.
Folks, it bears repeating: READ THE FINE PRINT ON ANY DEBT YOU INCUR. Read the fine print on loan documents. Read the fine print on your credit card agreements. Read the fine print on your mortgage. (This latter one is very important. I don’t care if you have to sit in the title company’s office for two hours while the person helping you steams and fumes about being late for dinner — read your mortgage documents before signing them.)
I spent four hours today going over the paperwork for my new credit card before activating it. I found several discrepancies, and called to have them clarified. The banks do not have your best interest at heart. You must look out for yourself. If you don’t, you may find yourself borrowing money at 99.25% from a shady company endorsed by a C-list television star.
(I’m almost afraid to look at the ads Google has decided are appropriate for this post. I’m sure they’re the very thing I’m railing against. Man, I wish they’d let me expand my “banned advertisers” list…)
Addendum: Miranda did some digging and found these commercials on YouTube (which is pretty apt considering the post I’ve written for this afternoon):
Addendum II: My wife pointed out a related article from the local paper. The state legislature recently passed new regulations on the payday loan industry. Now payday lenders have lost interest in Oregon. (Yes, I think it’s a terrible pun too.) They’re packing up shop and leaving because they’re no longer able to charge APRs as high as 520%!
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Glad we agree. Actually, despite that I put your name on my post, I was mainly addressing Angie Hartford’s comment.
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“The people who own CashCall” are one Paul Reddam, of Fountain Valley, CA, the same guy who founded Ditech. http://www.ardenrealty.com/aa_news.html#Cashcall
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Anyone who takes financial advice from Gary Coleman deserves what they get!
LOL
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[...] I think this is the Gary Coleman of yesteryear – he’s pitching loans for debt-slaves: It seems that lovable rascal, Gary Coleman, has found a way to recover from bankruptcy. He’s pitching outrageous loans to people who don’t know better. Bankruptcy for Fools [...]
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Gary Coleman Pitches Outrageous 99.25% APR Loans…
This story has been submitted to Stirrdup. Your support can help it become hot….
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I don’t know if anyone else noticed but at the end of the commerical, a smiling Gary crashes his car into something offscreen. That along with the overal sleaziness of these type of commercials made me think ‘why would someone want to put themselves into a situation where they are sure to crash?’
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Glad someone, somewhere, has publicized this, altho’ the folks who most need to read it probably never will. All I was able to see when I viewed the commercial for the second time was that “99.25%,” which was enough to realize what an awful scam this is.
And they must be making decent money off this, otherwise they couldn’t afford to buy all that tv time.
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Abubuka pitches outrageous %99.25 APR loan…
Abubuka pitches outrageous %99.25 APR loan…
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[...] Gary Coleman Pitches Outrageous 99.25% APR Loans [...]
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Anyone here saying laissez faire economics and free-market need to understand that offers like this are considered a break-down of a free market system. As the sellers of these loans have perfect information and the buyers don’t, there is a condition of imperfect information, thus creating a market inefficiency. This is no good for anyone except the loaners themselves. These loans cost sociecy more than they benefit it.
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Shame on the TV show’s that accept advertising from these guys as well. When I commented on this commercial last month, the commercial was appearing on a “TV Judge show.”
http://lawramblings.blogspot.com/2007/06/unscrupulous-lender.html
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“After three-and-a-half years, the borrower would have repaid the $2,600 principal and $6,743.61 in interest. That’s more than two-and-a-half times the loan amount.”
Sure.. but that’s the same as my mortgage. My mortgage might only be 5% or so, but over 35 years I’m paying over double the amount back.
There are people out there who really need these hideous, sub-par loans who can’t get money any other way. As Zimbabwe is demonstrating, you can’t force people to lower prices, so if 99% is actually competitive for some people, then it’s the best of a bad deal.
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Gary Coleman Pitches Outrageous 99.25% APR Loans…
And laughs about it in the ad….
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I especially like how he basically admits to being rejected by his entire family in one of these ads.
Actually, that’s really sad…
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I’m so tired of people yelling “the government must protect us”. Lets face it if you’re going to one of these places for a loan, no one else is going to give you a dime due to your past performance. PERSONAL RESPONSIBILITY!!! If you decide to enter in a 99% loan, why should I care. If you knew you couldn’t pay back a loan, why did you take one out. To buy rims, chinese crap at Walmart, or just to pay your other bills?
Although, I will say, maybe these people are just using the US government as their financial model. 8.88 TRILLION DOLLARS and climbing 1.3 BILLION per day. Who cares about a 2 grand loan. HA HA. The US is bankrupt. Bring on our Chinese occupation. Will we be called freedom fighters or terrorists by the Chinese?
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[...] 99.25% APR, wow, that’s better than the last one I asked, they wanted 100%. [...]
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Here’s the APR’s per CashCall.com:
http://www.cashcall.com/General/Rates.aspx
99.25% is their highest, but 59.95% is their lowest. Yikes!
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This ad is only one of hundreds that are permitted to air, by the FCC, in which exploitation, deception and false-claims appears to be the prime result.
What this country sorely needs is a review committee [similar to the rating system of overtly sexual content, violence and other basically objectionable content for films and TV shows]to catch and deny airing such ads based on thier morality and true purpose of taking advantage of mentally backward individuals.
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What funny about payday loans is that they were introduce to hep with bills and unforseen accidents like cars breaking down now it like people get them to show someone a good time or to travel of some sort but when companies plan on using this to their advantage people call them mean and crooks. look when people use to borrow money from loan sharks it was for what to gamble or do something real stupid and it was leagl then , somebody just decided to make this legal as possible. now i do fault the compnay for getting a little to greedy but i balme the consumer more becuase they have bad sspending habits. these companies do have standards to loan money beacuse you do have to make a certain amount of money the thing is when you constantly recoup on a old loan that is where the interest piles up because someone decided to spend the money to pay it off , so will just pay the weekly interest.
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[...] read more | digg story [...]
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My wife and I had to go to these Jerks 3 years ago when long distance moving. We borrowed the usual $2600.00.thus far we have paid 30 pymts. of $199.00.Quite frankly, I’m sick about it,BUT, I didnt read the fine print, just needed money now.
The good part of all this is,I only have 12 pymts left and I’ll be free to kick myself in the ass for years to come.Buyer Beware!!!!!
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Nural “CEO”:
What company are you the CEO of?? Boy, if your grammar and spelling are indicative of it’s product I’ll surely place you right up there with payday loans!!!!!!
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In the U.S. interest rate are going lower, Gold is going higher, Oil is going higher, inflation is going higher, the dollar is going lower. What is wrong with this? Everything! At some point the FED is going to have to raise rates bigtime. We are in a very, very, precarious situation at the moment. I think Gold will tripple to over $2,000 an ounce when the market finally wakes up and sees the real inflation. Last I checked a lower dollar = higher import prices. There is no inlfation deflator here. With commoditioes on fire you can forget about that. Bernanke should have never lowered rates last week. However, the Fed might be doing something that few have talked about. Maybe the Fed has abandoned the dollar the crush teh trade deficit. Good luck, it will take 20 years to correct our 6% of GDP trade deficit and move it back to under 1% of GDP, unless you want to seriously disrupt the global economy. We are in for tough times people. Very tough!
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[...] personal-finance blog Get Rich Slowly ran the numbers. Let’s say you take out a $2,600 dollar loan at 99% for 42 months. Sure, you would pay off [...]
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Actually, you don’t need a calculator: They have the calculations on their website at https://www.cashcall.com/General/Rates.aspx. Note in California, you can borrow up to $10,000 from these guys. However, they’ll only charge you 59% interest.
Let’s see 42 payments at $216.55 comes down to $9,095.10 (and to be fair, it’s only at 96% interest. The 99.25% is the compounded APR rate.)
What is sad is reading the testimonials at https://www.cashcall.com/Testimonials.aspx. The people are so grateful. Some talk about the sudden “need” for quick cash. One guy wanted to buy a car. Wait till they try to get this monkey off their back.
BTW, this is a service of the First Bank of Delaware (http://www.fbdel.com). If I had an account with them, I’d cancel it immediately.
If you think this guy is slimy, check out BlueHippo.
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One aspect of these outrageous loans that I have not yet seen discussed here is their use by drug dealers.
Has anyone ever looked at the people who do pay back the entire amount a week later?
I have heard rumors that some of the heaviest users of these quick-loan businesses are individuals who use the dough to purchase a large amount of drugs/contraband/whathaveyou, which they can then turn around quickly, make a profit, and get the money back to the lender.
Many of these places pride themselves on how easy it is to get money, has anyone else on this thread heard anything about situations like this?
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Dave—No, the students don’t use sharpened toothbrushes. They use guns.
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Amount Paid to Borrower Directly: $2,525.00
Prepaid Finance Charge/Origination Fee: $75.00
IF WE ALL GOT TOGETHER AND DID SOMETHING WE COULD MAKE IT STOP
I have been paying cash call for 1 year 1 month on a loan of 2,525.00 and will not be done paying it off until Oct 1, 2010 of a grand total of $9,163.37
ANNUAL PERCENTAGE RATE
The cost of my credit as a yearly rate
99.02 %
FINANCE CHARGE
The dollar amount the credit will cost me
$6,638.37
PAYMENT SCHEDULE
One payment of $285.88 on May 01, 2007.
40 monthly payments of $216.55 beginning on June 01, 2007.
One payment of $215.49 on October 01, 2010.
FOUND THIS ON THE WEB!!!
I am currently employed at CashCall right now as a collector. Although, They are not a collection agency…the collections department is approx. 500 strong and growing. This is the most illegal collection department that i have ever worked for. I have met people who have worked for Shekinah and NCO who now work at CashCall, and they say we are 10 times more illegal. Everyday it is hilarious hearing not just one but all collectors telling 3rd party’s or whoever answers the line that they are from the sheriff’s, attorney’s, legal department, fraud department, court house, and investigation department. They threaten suit, garnishments, actually anything they can think of. The crazy part about it is that all the management knows and they are ok with it. The motto there is “Do what you have to get the money”. so whether you are 30-60-90 days late …you will get these threats guaranteed. I don’t consider these guys good collectors they are just total thugs. As a collector myself i never thought i would say this, but i feel bad for the debtor..96% interest. is that even legal.. If you are a customer with CashCall and you are late as little as 30 days…record the phone call,,,you will have an instant lawsuit. ”
the company fails to provide copies of contracts or other disclosures concerning the terms and conditions of the loan agreements. Many customers complain that they are being charged userous interest rates in violation of the State law in which they reside. Other complainants report harrassment in the form of extreme or hardcore collection practices which they claim are unnecessasarily used. Customers report the company makes repeated calls to friends and co-workers used as references causing them embarrassment, distress, and jeopordizing their employment. Other complainants allege company representatives treat them like criminals, use threats and rude remarks concerning their families, and threaten them with physical contact if payments are not received.
The company responds to complaints by disputing the complainants allegations, claiming they act in accordance with all state and federal regulations. In some cases, they do issue credits. Allegations of abusive collection tactics are generally not addressed. ”
REPORT THEM TO THE ATTORNEY GENERAL AND TO THE FTC
Written by Jack, on 17-05-2008 03:57
I work for them. I know they are worried about lawsuits. Our company has allowed the reps and associates to harrass the *** out of you people. Now that there’s changes being made because of the lawsuits all of the reps are being watched very closely. Im not trying to justify anything. Blame Louis Ochoa for letting this all go down. Our CUSTOMERS never should have treated this way. They deserve better. He did nothing while reps were harrassing customers and threatning the customers with lawsuits. Finally Paul Reddam steps in because he dosent want to pay anymore lawsuits from the customers. It’s to late Reddam. Your employees hate working there because of people like Ochoa who they cant trust. You work them like slaves and treat them like dirt. And now you wonder why the customers feel harrased? Put that carrot out there that we work so hard for and now you act like you care about the customer? Never. He only cares about MONEY. On behalf of the GOOD employees who actually care about our customer, I appologize for what you have to go through. Record everything. Keep track of multiple calls. Always remember, there talk is cheap. They lie about everything.
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