Like many people, a substantial chunk of my morning goes with sorting through a plethora of different junk emails that arrived overnight.

It would be easy to say "well, why don't you just delete it all?"

Well, the reason is that I do most of my work online; I do editing work for people and I'm an online seller, so I have to pretty much look at everything that comes in... at least give it a cursory glance in order to make sure that it doesn't actually have to do with an order or a client inquiry.

As I cleaned out one of my business e-mail accounts this morning there was sadly nothing to do with actual business, just a bunch of solicitations.

In fairness, almost none of them were outright junk mail (like discounted Viagra or magical air fryers that are bound to break after 10 minutes); the majority were from service providers that I do business with, most of whom hound me over daily basis to buy more of their services that I'm already buying.

Can't they just be happy that I'm a paying customer, at all?

We Want That You Should Borrow Money!

In these days where many small business people and individuals are struggling to make ends meet financially, I have increasingly been noticing how many of these solicitations are offers to lend me money.

"Would your business benefit from a working capital loan?"

Why sure it would, but would it really?

Probably not because if I can barely make ends meet without a loan how am I going to make ends meet if I also have to fork over a monthly payment for debt service?

But that's not really what irks me. What annoys me is the fact that I do periodically check out these things and they seem to have absolutely no bearing on reality. Or, not any bearing on a reality I'm inhabiting!

One offer I scanned claimed that I was "pre-qualified" to borrow $10,000 to help me grow my business.

I checked out the offer, particularly because it claimed to have one simple application, the ability pay back whenever you can, and pay only an origination fee, but no interest rate.

OK, I'll bite. How expensive could it be? 20% APR? 29% APR?

Naturally Nothing is as it Appears to Be!

For starters, it sounds like you're going to borrow $10,000, but what you actually get is $8000. The so-called fees labeled as an "origination fee" rather than an interest payment are taken out of your borrowed amount up front so technically speaking you're only getting 80% of the principal you're borrowing and the other 20% you're immediately liable for slides into the lender's pocket.

Technically speaking it is true that you can pay it back *"whenever you want," and technically speaking it's that there's no interest rate. However if you haven't paid it back in full within six months, the lender starts charging a "2% servicing fee" on any outstanding balance you still have.

So let's say you do decide to take this $10,000 offer… and it takes you a year to pay it back in full… You could end up paying as much as $3920 to have the use of $8000 for a year! And that's an absolutely hideous APR of almost 50%!

And yet, there are evidently people who take these offers or the lenders wouldn't keep making them!

I see much the same happening with some of the personal loan offers I get in the mail. Some are so ridiculous in terms of the fees they charge that calculated that the lender could have a 40% default rate on the loans they make and still come out making a profit!

Maybe I'm old fashioned, but the antiquated term "loan sharking" pretty much comes to mind.

Frankly, I'd rather struggle along and manage a marginal business on my own until the greater economic situation improves, or I just get too tired of the struggle and decide to go flip burgers at McDonald's instead!

Thanks for reading, and have a great week!

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CuratorCat 25-AUG-2022