The Solvency Shark saw a commercial recently for a loan company called “Western Sky Financial”. I perked up when an American Indian claimed he could put $2,500 in my bank account overnight. When he argued that his loans weren’t cheap but better than payday lenders, I had to investigate.
I went to their homepage and started an application to see how much information they were collecting. They want your home state, full name, contact information, date of birth, driver’s license number, home address, Social Security number, place of employment, pay schedule, whether or not you have direct deposit, monthly income, monthly expenses, references and your reason for taking out the loan.
I’ve never applied for a loan before, so these intrusions may be par for the course, but giving that much personal information over the internet makes me uncomfortable even if I’m not already suspicious. The last step in the process, awesomely enough, is to “explain in one sentence what makes you a good credit risk for this loan.”
Still, I can’t pin these guys down. The cheap commercial leading to the cheap website with an invasive application certainly screams “scam”, but they throw me for a loop when they explain candidly just how ferociously they’re going to tear my face off with interest. The guy in the commercial isn’t lying when he says, “Yes, it’s expensive”:
They offer a $1,500 loan at 194.7% APR that comes with a $500 “Loan Fee”. Just in case you’re wondering, the complex, technical, financial term for a loan that comes with 200% interest and a 33% fee is “biggidy-bonkers”. The payback scheme is more mind-blowing still: $166.95 per month for two years for a grand total of $4,006.80. You get $1,000 quick and lose $4,000 slowly. “Yes, it’s expensive”.
They also offer a $2,600 loan at 139.34% APR that comes with a $75 “Loan Fee”. That’s pretty schweet, right? You’re probably thinking, “Hey, at the higher lending level, the interest is cut nearly in third and the fee, well, the fee is practically reasonable!” Hang on a second, though, because here comes the “ka-BOWzer!” moment: the payback scheme is $298.94 per month for three years for a grand total of $10,761.84. “Ah-WOO-gah!” is the sound effect your eyes make as they pop out of your head. “Ah-WOO-gah!” You get $2,500 quick and lose $11,000 slowly. “Yes, it’s expensive”.
How could Western Sky Financial’s loan service not be as bad as payday lenders? It’s clear the consumer gets a raw deal, but what still messes me up is that they tell you all this stuff upfront! It’s as if they only care to attract those people who are so bleeding desperate they have no choice but to agree! They even warn you frankly that you may not qualify for the best rates (as if 195% APR is the “best” rate) or how Western Sky “reserves the right to change the rates and loan products listed below without notice.”
Their terms of use are equally blunt: “All borrowers must consent to be bound to the jurisdiction of the Cheyenne River Sioux Tribal Court, and further agree that no other state or federal law or regulation shall apply to this Loan Agreement, its enforcement or interpretation.” Shkiggidy-ba-blamzoid!! Since the business operates in a sovereign nation that exists within our own, you can’t get help from either your state or the USA if you end up having beef.
Pass the scam pipe, Robs-Me-Blind.
Live well, live well within your means, and remember – that’s how the Solvency Shark seas it!
Note: Western Sky Financial periodically adjusts their repayment schedule, but the interest rates charged by Western Sky remain prohibitively expensive.
See the commercial as captured on YouTube.
He served as a Senator for the Graduate and Professional Student Federation, fighting to keep tuition costs down for graduate students struggling with their finances and student loans. He also developed his budgeting skills during his time as a Treasurer for the Graduate Romance Association. He enjoyed becoming more active in his local community and working to make a positive effect on his surroundings.
While an undergraduate himself, he spent a year abroad in Europe earning his degree in Spanish and French. While studying in both Sevilla, Spain, and Montpellier, France, he was exposed to the everyday reality of living under different economic and financial systems. Among other interesting travels he has made is a financial pilgrimage to the Spanish stock market in Madrid.
Stewart Pelto brings his rigorous academic education and his international experience to the problem of raising credit awareness and promoting financial responsibility. He hopes that his articles will teach his readers about debt and credit in an easily accessible and readily understandable way.
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