HOW TO BORROW MONEY RESPONSIBLY, AND HOW NOT TO

Every spring thoroughbred horses compete for one of sport’s most elusive prizes, the Triple Crown. Starting on the first Saturday in May and continuing over the next five weeks, a horse must win three races in a row, the Kentucky Derby, Preakness Stakes and Belmont Stakes. There’s a reason thoroughbred racing is known as the “Sport of Kings.”  Owning racehorses is prohibitively, ruinously expensive and out of the question for all but the most wealthy.

As I watched Nyquist, the winner of this year’s Kentucky Derby and the odds-on favorite at Preakness, I heard the television commentators stated that the horse’s principal owner, J. Paul Reddam, was the founder of CashCall.com.

Cashcall.com is an online lending business that offers anyone with a bank account emergency cash loans from $2600 to $25,000. These are unsecured loans with “easy monthly payments” for when people are in a bind and need money fast.

Like payday loans and auto-title loans, these short-term financial solutions often cause more problems than they solve, miring customers in debt for years.

Like payday loans and auto-title loans, these short-term financial solutions often cause more problems than they solve, miring customers in debt for years. If they are unable to make a payment, the customers often refinance or borrow more money repeatedly, trapping themselves in a never-ending cycle of sky-high payments.

The Consumer Protection Finance Bureau filed a lawsuit against cashcall.com several years ago, alleging that they “engaged in unfair, deceptive, and abusive practices, including illegally debiting consumer checking accounts for loans that were void.”

At time of writing, there are at least 426 complaints on the Consumer Affairs website. Reading through these complaints, they allege interest rates of more than 110%, sometimes up to 200%, and harassing phone calls from company representatives up to 11 times a day.

After two years of paying $485 per month back on an original loan of $5000, one complaint’s author claims to still owe more than the original loan!

Let me stress that I am not singling out cashcall.com as better or worse than any other one of these types of businesses. Using any of them is an equally terrible idea.

I understand that everyone gets into a bind at times. Hard financial times can happen to good people. But if you need money:

• Charge all you can to your legitimate regular credit card.
• Ask a family member, friend or boss for a personal loan.  Put everything in writing.
• Do whatever it takes to set up a payment plan with a debtor.

Nothing is worse than getting stuck for life paying off the “juice”.

I realize none of these are great options, but nothing is worse than getting stuck for life paying off the “juice.”

Borrowers say they feel like the proverbial “hamster on the spinning wheel.” They are trying their very best to move forward and pay off their debt but they never get anywhere.

It is unfortunate and ironic that those business owners whose customers are in dire financial straits are making a financial killing.

Be smart. Take your time and investigate your options before entering into an agreement that could be financially devastating for years to come.