I opened a line of credit with mobiloans end of last year. I borrowed roughy 1000.00 before the end of last year. I've been making payments on the account bi monthly as agreed in the amounts that they were charging.
I recently logged into my account only to find that my available credit was less than 100.00 dollars. Perplexed at this, I checked my payment history and was shocked that roughly 50.00 was being applied to my principal and the rest was going toward "Fees"
Mobiloans "new twist on cash" is Frankly... Evil. They have devised a well thought out scheme that maximizes a persons need to depend on them and a false sense of security. We assume as consumers in this country that the government is watching and regulating things to make sure we are not being blatantly set up by a business entity to be exploited financially.
They use a "hook" on their website that tells you you only pay $3.00 for every twenty dollars you borrow up to $500.00 and $2.00 for every twenty dollars you borrow over that. (something to that effect)
The repayment plans are all 20 payments consisting of a Fixed fee portion and variable fixed fee. Yes, I said that right. They have a fee that is "fixed" to the individual payment tier. That Fee starts out very high in the beginning and goes down slowly as you get the end of the repayment term. Basically, it is structured like a mortgage. Interest up front or in this case higher fees and slowly it reduces except The odd thing about this is the principal stays the same the entire time. Over time with your mortgage, the amount paid towards your principal loan balance increases as the amount of interest decreases.
When I recently calculated the repayment of the $1000.00 I borrowed over 20 payments (Ten months in my case) I will have repaid $2265.00 (initial 1000.00 borrowed + 1265.00) in fees. As a simple interest calculation Mobiloans "fees" equate to 126.5% interest.
For a comparative perspective, I did the same calculations for the $500.00 loan amount. If I did it right it comes out to an equivalent of 146% interest.
Conclusion : The more you borrow with Mobiloans the lower interest or in this case "Fees" you pay.
Doesn't that contradict common sense?
I don't have the statistics available on what the majority of Mobiloans customers are borrowing but based on what I discovered I am willing to bet most of their clients probably borrow 500.00 or less and are subject to pay the higher amount. After all, The more money you borrow - the higher the risk to the lender right? Therefore the higher the interest rate Right? Not with Mobiloans, borrow more and pay less fees.
The point I am making is this system is completely set up to maximize unfair, unreasonable, and unethical profits from those that don't have anywhere else to turn to. Additionally, Financial services in this country use something called an interest rate. Even though mobil loans uses the word fee, I made the assumption that there was an interest rate calculation behind the fee. NO Normal Person of Normal intelligence is going to think that the fee on 500.00 will equate to 146% interest over 10 months.
When I realized I was being for lack of better term cash raped, I emailed Mobiloans. I was told to call them and I did. The Customer Service Rep. was difficult to speak with and I asked her to have her supervisor call me. He did and he was the same way. I asked for a resolution to be worked out with regard to this. His Resolution to me was to read things. Which I did at the time and came away from it with a different understanding than what I am experiencing. The other part of his resolution was for me to pay more a month on the principal. The issue I called him about was the unfair lending practices and charges. I asked for something to be done about that. To which he said no. I asked for his supervisor to call me. It's been two days and nothing. I will be filing a report with the better business bureau and division of consumer fraud. If anyone else has has similar problems please post your situation here as well. The word needs to get out, These types of predatory lending practices will STOP!