What'chu talkin' 'bout Willis????

A few days ago, I saw my favorite 70’s child star actor Gary Coleman on TV pitching a website called callcash.com (www.callcash.com). This appears to be a website offering unsecured personal loans. Now I’m not a banker or financial wizard of any type, but from what I can tell, this means that they will loan a person money without any collateral, such as a house or car or other item. When I see commercials like this I usually try to take a quick peek at the fine print, just because I know they don’t want me looking at it. Well, in this particular ad I could have sworn the fine print stated something about a 99% interest rate. The information wasn’t displayed very long, and it was printed awfully small, so my first thought was that I had seen it incorrectly. Of course, at that point I became curious. I know home and car loan interest rates have been creeping up, but I figured they are still in the 6% to 8% range. Credit cards are known to have pretty high interest rates, and I’ve seen them as high as 29%. So I figured that callcash’s rates would be comparable to this rate considering that these types of loans probably have a lot of risk involved for the lender. Still, I must have read that wrong…99%???? It was time to check out their website.

Here is the link to their rates page:

http://www.cashcall.com/General/Rates.aspx

As it turns out, my eyesight is still pretty good. Using Michigan as an example, here are the published rates…

Loan Product-Interest Rate--APR---# Payments--Payment Amt

$5,075 Loan....... 59%......59.95% ....... 84 .........$254.03

$2,600 Loan....... 96%..... 99.25% ....... 42 ..........$216.55

$1,075 Loan....... 89%..... 96.78% ....... 42 ..........$83.89

Hmmm…. Let’s think about this for a minute. For a $2600 loan:

42 payments X $216.55 per payment = $9095.10

WHAT'CHU TALKIN’ ‘BOUT WILLIS?????

Am I missing something here? Again, I’m not a banker, or a lawyer, and I certainly don’t try to play one on TV (or the internet), but isn’t there some sort of legal limit on interest rates? If anyone knows the legal loophole, please let me know because I’m curious. I mean, hey, I can scrape together $2600 to loan if I knew I’d get back nine grand after 3 ½ years.

I have been lucky and very thankful for the fact that I have never been in a position where I needed a cash advance or short term loan such as this. If there is ever a point that I need to, I’m sure I’d find some sort of alternative. Apparently there must be someone taking out these loans, otherwise callcash.com wouldn’t be able to afford to pay top notch stars like Gary Coleman.

Let the buyer, or in this case the borrower, beware.