When you need money, you just need it. Unfortunately in our world, matters that can be resolved with money offer no other alternatives. If you have someone in the family who has just been hospitalized, you have to pay for their stay at hospital and other medical expenses in the form of money. There is no other way for you to pay for the services of the doctors and nurses. Now, when you need a small help with finances, you usually go for unsecured loans such as payday loans. They are easy to get, do not require a security from you, and can be obtained in very little time.
However, the downside of such loans is that they come with a huge interest rate. In many cases, people would reconsider getting the loan when they look at the interest rates. However, you are so compelled by your situation at times that you have to get the loan and pay back an interest rate that could be in three figure percentage points.
Now, many US citizens used the services of Think Finance, an online lender that provided payday loans and other closely related services to its customers. The online lender had a network of other companies and banks through which it used to provide the services to its customers. Just recently, the company has filed bankruptcy and a class action lawsuit has reached its first milestone. As a result, Think Finance has been asked to return the money of its customer. Neuercapitalscam is here to explain you so Let’s get into the details.
Think Finance – What Went Wrong
So the company used to forward loans to the borrowers. Now, when you are looking for a short-term loan, you should already know that you are going to pay some big interest on repaying the loan. Short-term loans are given without securities, and since the lender is trusting you for the most part, they imply that through blown-up interest rates. Don’t be surprised if you go for a payday loan and find out that the interest you are going to pay back on the loan will be 200%. However, not all states in the US allow such loans. In some states, there is a limit on how much a lender can charge as interest on a loan of any kind.
The announcement of the settlement of the case came from the Consumer Financial Protection Bureau. According to the announcement, Think Financial, along with other companies that were operating as a network with Think Finance will have to return the money that they have received from their borrowers. There were certain terms and conditions associated with how you could have claimed a refund. If you qualified for the refund, however, you must have received a check for the refund in your mail by now. The authorities made sure that the customer did not have to run after any entities to get their money back.
You can find more details on whether you qualified for the settlement money or not on this link. The funds have been allocated for the settlement. The amount that was allocated to the account was $39 million and it was supposed to go to the deserving customers gradually but surely.
The main reason why Think Financial had to face a lawsuit was its high interest rates. According to the details of the proceedings of the court, the company was charging some customers more than 400% on their loans. Would you like to pay that amount on your loan no matter how much money you needed? Yes, you might be forced to get such a loan by your conditions, but you know it is nearly impossible to return such a loan unless you sacrifice a lot in your life. In a way, the lender was taking advantage of the precarious situations of the customers and forwarding them loans at excessively high rates.
As a consumer, you have to know that the company could not have charged such interest rates in any way or form in Pennsylvania. While other states might have different takes on such loans, Pennsylvania is a state that does not allow any loans to come with such high interest rates. In short, the company was busying itself in an illegal activity. There was nothing that Think Financial could have done to defend itself. The company filed bankruptcy and agreed to return the money to the consumers through the settlement fund of $39 million.
You have to keep in mind that the cases are not closed completely yet. The company can face even more charges in the coming months. In that case, the settlement fund might increase a bit more.
Now, in addition to charging high rates of interest, the company was also not licensed to provide the services it was providing. It is weird that a company that had made millions of dollars from its customers did not think about getting licensed ever. Perhaps, it might have started out as a scam. However, if things were going smooth, the company could have get itself licensed to provide services. But in this particular case, the company did not have any state licenses to perform its operations. That’s another reason Think Financial was trialed and found guilty of being a deceptive lender.
Now, you will be surprised to know that Think Finance did not break the law of just one state. The interest rates it was charging on its financial products were not allowed in seventeen different states. You know that a company with such big blunders was not going to get away with all of this. After the finalization of the lawsuit, the company will not be able to form and operate in these seventeen states ever again.
What’s in It for You?
If you are a consumer, who is often in a situation where he/she needs money, you have to be aware of all such online finance scam. If you consult with experts, you will usually notice that they will never recommend payday loans to you. A payday loan is exactly what the name says. However, if you look closely at this type of loan, you will realize an inherent flaw. For example, if you do not have enough money to meet a certain expense in your pay today, how can you return a loan that is just as much as your monthly salary? Also, you have to keep in mind that this loan needs to be returned pretty fast.
In a way, you are getting yourself into a loop that does not let you come out. You can’t pay back the loan as you promised and then you get another loan to pay this one back. This way, you keep getting loans until you are in a situation from which there is no way out for you. Now, if you look closely at a payday loan, you will realize that if you get only a small amount as a loan and the lender charges you 200% interest rates, you might still be able to manage to return the loan in some way.
However, you cannot even imagine returning the loan if the interest rate on it is nearly 450% – yes, that’s the interest rate that Think Finance was charging its borrowers. Think about the people who must have got themselves into this trap thinking that they were getting a benign loan only to resolve a small financial problem. Also, it is amazing how the company is able to file bankruptcy and still agreeing to return $39 million to the customers for being deceptive with them. Think Finance might not be the only company operating this way. There are many other companies that have the same business model i.e. make poor people poorer by giving them a little and asking for a lot.
Be Careful in the Future
Think Finance Settlement scam has reached its final destination. However, you should know as a consumer that this is not the only company out there looking at your money greedily. There are many other companies that claim to solve your problems but are there to make your lives difficult. Whenever you see something fishy in a loan or service being offered, you should stay away from it. For example, if you are thinking about going for loan consolidation, make sure you do your homework to know how things will become easier for you after getting the loans consolidated.
When it comes to a payday loan, be sure that you are agreeing to an interest rate that your state allows. If a lender is charging more interest rate than what’s legally allowed by the state, you have to blow the whistle as soon as you can.
Always talk to your family members and relatives before you go for a loan if the amount you need is small. If you think you won’t be able to manage to return a loan, then you are surely not going to be able to return the loan. Get a loan only when you are 100% sure that you will return it easily. Even then, do not fall for interest rates of 400% and more.