Cash Money® Sale! (Ugh)

Jun 19, 2014 by

Wow, how would you describe this commercial? Obnoxious? idiotic? pathetic? insulting to women and anyone else with cognition? These all seem appropriate, but you probably have some more original thoughts you might like to share in a comment please.

No to payday loansCash Money®

Cash Money® is a payday lender. I believe the company does not operate in the U.S., but many, many identical outfits do. I’m on its case in particular because a) I don’t want Money Counselor readers using payday lenders, and b) Cash Money® has a place of business in my community, a short distance from my home.

New Cash Money® Sale

The commercial above is over two years old. I saw a new one on television recently, but couldn’t find it online. The offer’s been sweetened: now you can borrow $300 for just $20!

The “Bargain” Cash Money® Is Offering

Here are the details that underlie the $300 for $20 offer:

payday loan terms

The fine print.

In a nutshell, borrowers pay $20 for a 14-day, $300 loan. This works out to an APR of 174.1% (you can examine my math here).

The old offer promoted in the commercial above—borrow $200 for $20—works out to an APR of 261%.

So Cash Money® has slashed its APR by 87 percentage points. What a deal?!?

Why Cash Money® Offers 14-Day “Teaser” Rates

You know you’re already visiting bizarro world when 174% is a lender’s teaser rate, but here’s the kicker: If the first loan is extended—and most payday loans are—”regular fees apply,” and those fees of $69 every two weeks for each $300 borrowed (the maximum allowed by law, according to the fine print) translate to an APR of a whopping 600%.

Now you see why Cash Money® spends money on commercials designed to suck people onto its nasty treadmill to financial oblivion!

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  • Roadmap2Retire

    There are plenty of these outlets in Canada. I’ve always wondered what kind of a person wants to borrow from them. When I looked into the business, I found what a scam it was! I am still shocked ppl borrow money from them.

    Just goes to show how putting things into $ amount makes people think that its not such a big number, but when you put it into %, you realize the scam.

    • The marketing strategy of payday lenders is to induce people into taking out that first 14-day loan. I can see people in a pinch thinking, “it’s only $20, and I’ll repay the or $300 in a couple of weeks, no big deal.” But payday lenders of course know very well that few of their customers will repay their loans after a single two-week loan period. Most extend the loan, often repeatedly. (See the documentary “Spent,” http://bit.ly/1ip7cSH) Extending for, say, a half-dozen 14-day loan periods would mean, according to the “fine print” reprinted above, paying this particular payday lender $365 for the privilege of borrowing the exact same $300 six times for two weeks each time. That’s the payday lending business model, and that’s how they make their money.

  • I have always hated payday lenders with a passion. They are nothing but legalized thieves and con men. I noticed many of these outfits located just outside the gates of most military bases back when I was in the U.S. Air Force in the late 70s. I wondered who would possibly jump at the chance to owe so much money. The answer is the uneducated. Most enlisted military personnel only have high school diplomas. Many are not prepared to deal with the scammers and scabs of the real world.

    • Agreed Bryce, education with respect to payday lenders is the best preventive medicine. That’s part of Money Counselor’s mission!

  • Ugh it’s pretty sad that people still borrow from payday lenders and that they still exist until now. I guess they might be really desperate or don’t see the fine print or don’t work out their math properly. People have to be educated on what kind of lenders out there so they don’t fall into payday lender trap.

    • Thanks Stu. I think few borrow from a payday lender intending for the loan to be renewed for many 14-day periods. Most think they’ll be able to pay it off soon. But for the big majority of payday loan customers, that’s not how it works. It’s a tar pit–very challenging to get out once you’re in.

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