“I’ll lend you $1,200 but you gotta pay me $2,882.66 back or you’ll need more health care!”
Most Americans can’t come up with their health insurance deductible. What do they do? Some go without care. Some enter into Contracts of Adhesion, often borrowing money from predatory lenders.
Here’s an egregious example of predatory lending from a company operating in Texas.
Amount Disbursed
This is the amount that the customer will receive in their bank account if approved.
Example: Jane Smith is approved for a $1,200 loan. This $1,200 is the amount disbursed.
Loan Fee/Finance Charge
These terms refer to the dollar amount your loan will cost you, in addition to the amount disbursed. The loan fee/finance charge includes interest and CAB fees.
Example: Because she borrowed $1,200, Jane’s loan fee/finance charge will be $1,682.66.
Total of Payments
This is the sum of the amount disbursed and the finance charge. It is the total amount you must repay.
Example: Adding together the amount disbursed and finance charge, Jane’s total of payments comes to $2,882.66.
Term
This is the length of time over which your loan must be repaid. You may repay early with no penalty.
APR
APR (annual percentage rate) is a measure of the cost of credit, expressed as a yearly rate.
