96% APR. Really?

4 Replies

I received a loan offer today from Brookwood Loans... They offer small loans up to $3,500. They are charging rate of $96%!!! I had no idea that it was legal to charge such high rate. In three years you are paying back three times as much as you borrowed!

@Dmitriy Fomichenko  

  in many states this would be totally illegal.. IN Oregon any loan under 50k has a usury rate 

Ouch. It's all in the fine print.

A friend of mine in California received a very similar offer just 2 weeks ago.  Not sure if it's the same company, but the interest rate they quoted him was ~234%!!!!!!  Really!  When he read through the fine print (and posted it online via Facebook for the rest of us to see) he saw that the loan of ~$2800 had a 36-month term with like $500+biweekly payments and a total payment amount of >$8000!!!

I thought this kind of stuff was illegal too...and besides, what's the point?  You know NO ONE with any financial sense will go for that, and for those who don't...they're NO WAY they'll be able to abide by the terms.  I mean, if you can afford $1000/month payments, you wouldn't need a $2800 loan in the first place.  I just don't understand, realistically, what the company can gain??

@Dmitriy Fomichenko You are assuming you qualify for their best rate. Note that just below the APR it says "Higher rates may apply" !

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