Financial Predators: Vermin, Rodents and Other Insect Pests

Copyright © 2006 Ed Bagley

While there are predators all around us, we generally do not think of our financial providers as predators. Typical providers we might use include banks, financial centers (the fancy name some banks call themselves today), credit unions, mortgage brokers, and mortgage bankers to name a few.

With thousands of people going online and starting home-based Internet Marketing businesses daily, many quickly develop a need for more capital to build their new part-time, second-income enterprise. Some inexperienced newcomers fail to budget properly and soon find themselves in over their head.

Their next likely stop is to find a lender. I was stunned yesterday to get in my post office box one of those new, fancy, 6-by-9-inch oversized postcards with this screaming headline on the slicked up front side: Get $5,000 by tomorrow!

If I did not know better, I would have thought I was reading one of the exaggerated opportunities that pops up on my monitor every day, you know, the one that says “Join Us Now And Collect Your $2,000,000″ from “one of the world’s most rewarding financial associations.” Yeah, right. I could use an extra $2 million, and if I read through the entire sales pitch, I would probably find out that I really had to do very little to get it.

Sometimes it is easier to relate to the $5,000 you can get tomorrow (yes, you read right, tomorrow). You see, the lender in this case does not want a lot of legal paperwork and collateral to hold you up. Heck, they just need your signature!

This presents a wonderful opportunity to play Donald Trump. There was a time when The Donald could borrow millions by just signing his name on a dotted line.  Sure, the $5,000 lender, called CashCall out of Fountain Valley, California, presumably does a credit check and, even if you rent or your credit is not perfect, the $5,000 will be in your bank account tomorrow (this delivery process is commonly known among the financial community and those who borrow such sums in such ways as a bank wire transfer). And, of course, your immediate money problems are solved! Viola! (as the French would say).

Turns out the source of the money received actually comes from First Bank & Trust of Milbank, South Dakota, a member of the FDIC, mind you (this important fact is used to apparently inspire confidence in the lender which is probably in good standing with your federal government as FDIC does stand for the Federal Deposit Insurance Corporation, an independent agency of your federal government).

Words cannot express how choked up I am with compassion over the fact that a bank would lend someone $5,000 on their signature only, and deliver the money into their account the next day. Some banks are just too wonderful for words.

A lot of folks would be overjoyed at the bank’s generosity and understanding in their time of need. Then again, those same folks probably would be too excited about solving their “problems” to read the fine print in the same offer.

Did I just say fine print? Yes I did. That is the really small type on the bottom of the back of the life-saving postcard that has the catchy headline (get $5,000 by tomorrow!), and the prominent picture of ten $100 bills on the front, that says:

“Example of loan terms: The Annual Percentage Rate (APR) for a $5,075 loan is 59.90%, with 84 payments of $254.03.” This is what I call a 7-year, fixed-rate loan that will bring the lender $21,338 in return. So, here is the deal: You get a $5,000 loan and the privilege of repaying the $5,000 you borrow plus another $16,338 in interest.

It caused me to wonder if they sell asbestos suits in Milbank, South Dakota, surmising that some folks may develop a need for them, depending, of course, on where they might be going.

The next time your lender is being so nice to you, remember the message of this postcard, and ask yourself, “Why is this lender (or banker) being so nice to me?” The answer, dear friend, is not that he or she has your best interest at heart.

Why should I even give this seemingly obscure offer even two cents of my time? Only to make this point: Since when is helping a financially desperate person made better by driving them deeper into debt, and then leaving them as ignorant as you found them?

H. L. Mencken (1880-1956), who became a U. S. journalist and literary and social critic, once said “You can never underestimate the stupidity of the American people.”  Man, was he right.

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