“Rent-a-banks?” Just say “more-of-the-same”
As if you didn’t expect it, the battle continues in the financial services sector to eradicate predatory payday lenders in the United States. Despite individual states’ gains in recent years to cap payday loans’ annual percentage rates (APRs), like cockroaches surviving a nuclear blast, payday lenders manage to live to survive another day. Only now they have help – from rogue institutions termed “rent-a-banks.”
A rent-a-bank by any other name
A couple years ago, Sarah Ahmed needed $2,000. Moving from Ohio to Tampa, Fla., Sarah had to move quickly, rent a new apartment, and get her young son set up in an after-school program. As reported by Chris Arnold for National Public Radio (NPR), things didn’t start well. Ahmed tried to get a loan from a regular bank, but considering her student loan debt, she didn’t qualify.
Unfortunately, she began looking online, eventually coming around to a lender of whom – while they probably deserve to be put on blast – we’ll refrain from naming. This online lender was willing to loan her $2,300 to be paid back over the next two years. Then they proceeded to tell her the interest rate.
“That’s when they shared with me that it was, like, 98 percent.”
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