Payday Swift has been in the payday loans business for several years and have suffered the scrutiny that comes along with what appear to be high interest rates for these short term loans. To be honest, the rates for payday loans are higher than other types of funding alternatives, averaging about twenty five percent but are not as outrageous as many media outlets and banks claim.
Recently there has been a company called Western Sky Financial advertising loans for up to $10,000 claiming they were a cheaper alternative to payday loans. While we do not make it a point to comment on other financial products, we feel that this is a special case and needs review.
You may have seen the advertisements on TV offering overnight $5000 loans. It seems the ads have been running for a few months as of the writing of this article. The announcer proudly proclaims that the loans are expensive but are less expensive than a payday advance. We were intrigued and decided to research these claims a little further.
On the Western Sky website
it becomes painfully clear just how expensive the loans are. The following rate table is taken directly from the Western Sky website:
||Number of Payments
To start with a comparison to payday loans, we will use the lowest amount they show for a loan, $850. It appears that if you borrow $850, you actually will receive $500 after a loan fee of $350! So, just by signing the loan contract, you are instantly in debt for $850 and will only receive $500 of what you are borrowing! Not looking so good so far but it only gets worse. After receiving your $500, you are now required to pay another $150.72 per month for 12 months for another $1808.64 to pay off the loan you received for only $500 for a grand total of $2158 that you will have repaid for only receiving $500! This is in stark contrast to a payday loan for £500 that costs a grand total £625 and you actually get the full amount you borrow! (We are a UK based lender but rates for payday loans in the US are similar). There is no comparison between the Western Sky loans and payday loans.
Now, let’s take it a step further. Let’s say you borrow $5000 from Western Sky to help with some expenses. You will receive your full $5000 after paying a $75 application fee, not too bad. Now it is time to repay. You are now contracted to repay $486.58 per month for 84 months for a total of over $40,000! Yes, you read that right over $40,000 in debt for a $5000 loan. The only other way to get money with this high of a cost is to talk to someone with a Tommy gun! Outrageous does not even begin to describe this type of usery.
Is it legal? Not in the UK or the US, but, “WESTERN SKY FINANCIAL
is a Native American business operating within the exterior boundaries of the Cheyenne River Sioux Reservation, a sovereign nation located within the United States of America.” The proceeding quote taken directly from the Western Sky website. Being that the company is not operating by any rational set of morals or government consumer protections, they can do business as they please and rip off people who are desperate enough to fall for their exploitation. On a closing note, on their website under the hilarious heading of “responsible lending” thay make the following claim: “competitively priced products which we promote in a balanced way showing the risks as well as the benefits”. Sure, their loan products are competitivly priced, but only against ‘companies’ that will break your legs or worse for missing a payment.