BOSTON — Many people struggling to make ends meet are seeking out quick loans online to get them through.
Carlos Maldonado needed some quick cash to pay some bills. He went online and found Integra Credit.
“It seemed very honest, so I kept on clicking,” Maldonado said.
But Maldonado reached out for help after he noticed he was charged an interest rate of more than 100%.
“This is what they sent me,” said Carlos Maldonado as he pointed to his loan documents.
He was approved for a $2,500 loan, then noticed that after making payments, he still had a high balance. Maldonado asked for documentation and found he was being charged an interest rate of 141% and the cost of the loan was $3,200. In total, he would have to pay back $5,700.
“141% just doesn’t make any sense for the dumbest person in the world,” Maldonado said.
The Consumer Financial Protection Bureau received 20 complaints about Integra Credit from angry customers in the past two years. One consumer claimed he was charged 275% interest.
“Lenders certainly take advantage of people’s desperation and their need to lock them into high-interest rate loans like this,” said consumer attorney Jared Lee.
Lee says in some states, Maldonado’s loan would have an interest rate cap, but he says some online lenders have found a way around state-regulated rate limits.
“There’s actually a practice that’s commonly referred to as rent-a-bank where non-bank entities utilize a chartered bank simply to originate a loan and then transfer that loan back to the entity who’s really doing the lending,” Lee said.
Integra Credit uses a bank out of Utah, where there aren’t any limits on the rates lenders could charge borrowers.
“There are some legislative efforts ongoing exploring the possibility of a national interest rate cap, and that’s something that consumers should be looking into and deciding their opinion on,” Lee said.
Integra Credit did not respond to requests for comment.
Maldonado says the high-rate loan is making it difficult for him to pay for his diabetic needs. “This company is taking the money that I’m supposed to place for medication, to give it to them just doesn’t make any sense.”
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