There ought to be a special place in hell for companies like the one I am showing you.
What was sent me by a client was a letter from a company named Big Picture Loans. It was received by my client this past week in the mail through direct mail marketing. Apparently, Big Picture Loans had purchased a list from one of the bureaus – Experian, Equifax and/or Trans Union – to offer him access to a loan. The loan, in the amount of $800, was not something he had applied for nor needed.
The issue that I have is that this loan charges up to 768% interest, depending upon their criteria. The base rate is 499%. If you take a look at their website it describes the loan as an installment loan for short-term needs.
I have two issues with this:
- This is well beyond the Usury rates allowed by many states. True, some states don’t have any Usury laws. This particular individual, my client Myron, lives in the state of Minnesota and the maximum usury rate is set by state law at 8%.
- The only people this type of loan attracts is the less fortunate and the poor.
Basically, a Usury rate is used by states to define the maximum allowable interest rate a company or entity may charge. It is used in the mortgage industry to define the interest rate of contracts for deed, for example. There is not a simple formula to define what this rate is or how it is applied, except by state. For further information on the state rates, you may look it up at here.
So how does this company get by with it? It is located on sovereign land – on Native American soil within a tribe. As such, they do not have to comply with state laws. As a non-lawyer, I will not argue the legal merits, however, I feel this company is behaving in a highly unethical and morally incomprehensible manner.
Who would use such a loan? Only someone that is in dire straits and does not have the ability to raise this minimal amount – the poor. They probably would not understand the terms of the loan and/or the consequences of noncompliance.
There is a Latin legal saying that applies here: CAVEAT EMPTOR: buyer beware. My recommendation as a credit reset expert:
Never ever use this type of loan. Too many problems can occur.