CROSSVILLE (WATE) – A couple in Crossville received a check from a local loan company. When they read the fine print attached to the check, they were alarmed, so they called WATE 6 On Your Side reporter Don Dare who says the check is tied to a loan.
The check is tied to a promissory loan that has an unusually high interest rate. For some people getting a check for $1,000 or $2,000 with no questions asked would be a blessing, but at 44 percent interest on the amount of money borrowed, that could be a problem especially if you couldn’t pay off the loan.
Allen Vires is enjoying retirement in Crossville with his wife Carolyn. They had once owned their own business and are pretty wise when it comes to finances. They recently received an unsolicited check for $1,800 in the mail.
The check is from Regional Finance Corporation of Tennessee in Crossville. The company also mailed a letter to the Vireses.
“I’ve been selected and pre-approved for this special offer. It’s easy. No application to fill out. It’s fast. You’re pre-approved. So just cash and deposit the check and the money is yours,” read Allen Vires.
The couple did not sign the check. If they had, they would have taken out a loan. As parents and grandparents, the Vireses worry that some people would sign the check and deposit the money.
“It’s taking advantage of people who can’t afford it,” said Carolyn Vires.
She says the details are in the fine print on the reverse side of the introductory letter.
“It does by law tell you how much money you are borrowing,” she said.
The amount borrowed would have been $1,800. The interest rate was 44 percent and the amount financed was $771.
“So you are ultimately paying them back $2,571 dollars to use $1,800,” said Carolyn Vires.
That isn’t a bargain at all, and many people who are desperate may cash that check.
“I can see a young couple who have a child. They have a medical bill and someone is trying to collect. This to them is a lifesaver,” said Allen Vires.
“I think this is a company out to scam people who can’t afford to lose everything that they have,” said Carolyn Vires.
The type of loan offered by this Regional Finance branch is legal under both state and federal regulations. What makes this loan different than a payday or title loan, is that it is a promissory note of 20 equal monthly payments.
Regional Finance says this loan offer mailed to the Vireses was meant for people who generally don’t have access to more traditional lenders and don’t have ideal credit. That type of loan does provide easy access to money for many people, but the interest rate is steep.