By
Kenneth Long on February 16, 2012
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| Note: Debtors Unite has no affiliation with MoneyMutual and definitely does not directly market or endorse its products or services. |
Montel Williams is one of many celebrities that have endorsed questionable financial products that are targetted at poor families. This time he endorses MoneyMutual as a source of much needed short-term cash.
MoneyMutual is not a direct lender though. Instead, it is an advertising service that connects vulnerable families with predatory loan companies that are willing to take advantage of the desperate.
MoneyMutual claims it is not a broker for such loans, yet they connect borrowers with lenders. That is the definition of broker, making their claim a bit dubious.
What makes their advertising approach particularly reprehensible is that they specifically mention that as long as you are making minimum wage or are on Social Security that you can be approved. These are precisely the situations where repayment of a high-interest loan is extremely difficult.
Families that are in poverty do not have the financial means to repay predatory loans. They should not be taking out such loans. Instead, if they do not have enough money to get by, they need to either cut out unnecessary expenses ($100 cell phone bills, expanded cable channels, fast food) or attempt to earn more money.
Their website claims that "Montel Williams associates himself only with products that help people live better physically, spiritually, financially and emotionally." Endorsing predatory loans is doing nothing to help people live better financially or emotionally. They end up scared and depressed when their financial situation is further hammered by usurious interest charges.
What is the Cost?
Most loans are anywhere from $200 up to $1,000, making them a bit smaller than the intermediate term loans that
Western Sky Financial promotes. The shorter term makes a higher interest rate more likely. Since these are payday loans, you can expect to pay the historical average of 391% APR, or roughly 11 times the normal state usury limit of 35%.
If you took the average price of a McDonald's Big Mac sandwich of $4.20,
it would cost you $16.42 if you bought a Big Mac using funds from your payday loan. Are you sure you
really need to borrow money through MoneyMutual or any other payday loan service/provider/broker/etc.?
Price of Big Mac estimated from The Big Mac index courtesy of The Economist.