What Interest Rate Does Western Sky Financial Charge?

By Kenneth Long on June 20, 2011

Related Post: How Much Does the Western Sky $10,000 Loan Cost? [September 6, 2012]

Western Sky Financial is one of the most successful payday loan companies currently operating in the U.S. Their confusing loan fee and interest rate combination makes if difficult for most borrowers to know just how bad these loans really are. So exactly what interest rate does Western Sky Financial charge?

The answer is, it depends on how much you borrow. For a $2,600 loan, Western Sky Financial publishes a 139.22% APR. For this loan, you would make 47 payments of $294.46 for a total of $13,839.62. Of course, you are really only getting $2,525 in proceeds, since Western Sky charges a $75 origination fee. My first thought when looking at these rates is, what idiot would apply for such a bad deal? Apparently, many people are willing to throw away their future for a quick loan.

To put this in perspective, imagine buying a $10,000 car using the same terms. You would need a $288 down payment to pay the loan origination fee so that you could borrow the full $10,000 to buy the car. Then you would make 47 payments of $1,166.17 for a total of $55,098. That would be the equivalent of paying for a brand new BMW X5 yet driving a stripped down Nissan Versa. Nothing against the Versa, but do you really want to pay $55,000 for a cheap subcompact?

Considering these staggering rates, should you consider taking out their lower loan amount? It has even worse terms! Instead of a $75 fee, the $1,500 loan product carries a $500 origination fee. You only receive $1,000 on a $1,500 loan! Furthermore, the APR on this loan is a whopping 194.70% APR.

Using these terms on a $10,000 car loan looks far worse. First you would need a $5,000 down payment to pay the loan origination fee on a $10,000 loan (yes you read that correctly). Next you would need to make 24 monthly payments of $1,668.22 for a total of $40,037. Don't forget about the $5,000 down payment you made, raising the total to $45,037 paid for a $10,000 car over 2 years. That same purchase with excellent credit would have cost you less than $10,500 over 2 years.

The terms of loans offered by Western Sky Financial are very transparent. Yet, most people who take out these loans fail to see just how bad these rates really are. Even the blunt disclosure on their television commercial that "It's not cheap" is a fair warning that you are about to steer down a rocky path. However, you should be aware that it is not even a rocky path so much as it  is driving off a cliff.

If after reading this article you decide to take out loans with interest rates that are as high as this lender charges, then you deserve the financial nightmare that will follow. Our job is to help you avoid making another bad mistake, but even our hands are tied if you deliberately try to ruin your life. Still, we will not tell you "I told you so." Instead, you can expect the counselors at Debtors Unite to be understanding and work with you to remedy the damage.

If you have not taken out the loan, please do not do so. We can help you find better options for your financial needs. If you did accept the loan, then we can help you review your situation to determine what steps you need to take to get out of your trap.

Don't expect Western Sky Financial to be able to circumvent state usury laws forever. California, Maryland, South Dakota and West Virginia residents have been protected by their attorneys general who have blocked the lender from doing business in their state. Colorado is trying to block Western Sky Financial, but they have a legal battle to fight first. Don't wait for your state to protect you. Protect yourself from what is without a doubt a bad deal clouded by smoke and mirrors.