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Washington state payday loan legislation

washington state payday loan legislation

First Bank of Delaware Installment Loan for 2500 Dollars

First Bank of Delaware installment loans (AKA – FBDLoans) is still an online lending product. You are still paying high interest and you are getting approved quickly using their online application process. These are your typical short-term high-yield products that your typical cash-and-carry shops approve. They carry a very high interest rate (fees) on them.

FBD lend a minimum amount of 250 dollars and a maximum amount of 2500 dollars. Because they lend as high as 2500 they are very popular with borrowers who need more money than your typical short-term lender.

Here is a quote from their web site that explains just how expensive their financing is. You can count on paying an APR between 100% to 350% depending on how good or bad your credit rating is. You can be sure that if your FICO score is low you could be paying an APR of over 500%! See how steep a price you pay for this kind borrowing.

The cost of your loan is based on the size of the loan you are approved for. It ranges from $0.90 per day per $100 borrowed (324.1% APR) for small, short-term loans down to $0.28 per day per $100 borrowed (98.7% APR) for larger, longer-term loans for customers with successful payment histories or higher credit scores. While these rates are lower than the rates charged by many other short term lenders, they are higher than some other forms of credit, so we encourage you to pay off your loan as quickly as possible. For a typical transaction, the Annual Percentage Rate (APR) for a loan of $1000.00 is 198.5% with 18 bi-weekly payments of $104.00. [ FBDLoans ] [Time-Stamp: Sept 2, 2010]

FBD does one thing we can praise them for, and that is that

they fully disclose their fees and charges to the applicant(s)/borrower(s). Of course, they have to do that by law now, but they were providing full disclosure long before the new legislation from Washington. You can see some information here on the different laws each State has regarding high interest/fee lending .

So just for $hits and giggles, we’re going to run an application and approval that the FBD might process for a customer. We’ll use the following data for the loan based on what FBD has written at the bottom of their web site pages, but we will borrow the maximum amount of $2,500 and we’ll assume that your credit rating is NOT perfect.

From their site (I’ve timestamped these because we often see lenders remove or change information on their sites after they see we have blogged about their policies, procedures, rates, fees, and penalties for default );

The Annual Percentage Rate (APR) for a loan of $1000.00 is 198.5% with 18 bi-weekly payments of $104.00. [ FBDLoans ] [Time-Stamp: Sept 2, 2010]

So let’s take their word for it over at FBDloans, and we’ll amend this loan for a borrower who has a FICO score of 630. Now, we will make the APR go up to 397% which is exactly double of the example they gave us. Now you would be making installment payments of $208 dollars every 14 days (biweekly) on a loan of $1000.00.

Now let’s make the $1000 dollar loan a $2,500 dollar loan. This is an increase of 150% in money borrowed which equates to;

$104 x 150% = $260 per installment

$260 biweekly x 18 = $4,680 repaid over full term of loan

$4,680 – $2500 (principal) = $2180 in interest for 1 and a half years

What part of, “RUN FOR THE HILLS!”, don’t you understand?

Category: Payday loans

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