When you hear the term "variable rate" you tend to start thinking about a traditional bank loan for home mortgage. It's definitely not a term that you associate with an internet payday loan company. Yet, we have found an example with the company called Target Cash Now which is a Native American lender. This company shows that you can't always predict tribal lending firms. Sometimes ingenuity and flexibility do find their way into finance and that's the case with Target Cash Now.
What exactly does Target Cash Now do differently than other tribal lenders? It has to do with the finance charge and the APR that the company charge on a short-term loan. This company has a range of days for two different type of loan products. One is those loan types gets classified as the "weekly" pay period loan, where the loan can run as short as seven days but as long as 21 days. The second loan product is classified as "bi-weekly, semi-monthly, or monthly" loans. Basically, both of these groups just delineate when a borrower needs to make their repayment of the loan.
The finance charge for the "weekly" loan version is $15 per every $100 borrowed. The finance charge for the "bi-weekly, semi-monthly, or monthly" loan is $30 for every $100 borrowed. This makes sense, as the finance charges doubles as the length of time doubles. However, when you look closer at the terms of this company you see that they offer quite a bit of flexibility in the range of time to repay the loan, while the finance charge remains static.
The exceptional part of Target Cash Now is that the finance charge does not change for these two loans, even if the number of days the loan is scheduled for changes. In other words, the finance charge for a loan that is taken for 14 days is the same as a loan that is taken for 25 days. So what is changing is the number of days until the loan is due and the APR on the loan. That APR change is due to the fact that we (the borrower) can edit the number of days on the loan (and when we say 'edit' of course we are adding on days, not subtracting) so that the loan stretches out further over time. But as the finance charge remains the same the APR gets smaller. The company is allowing us to stretch (increase) the number of days of the loan without adding on extra charges, thereby giving the customer a reduced APR.
This ability to adjust the duration of the loan is very valuable. There are only a handful of online lenders that give this kind of latitude when issuing loans. The strong tendency is for the loan company to dictate when the loan has to be repaid. Giving the customer the option of adding on extra days is a fundamental and extremely helpful bonus to a potential borrower.
So how many extra days can you get? When you use the fee schedule calculator at the firm's website you discover that the "bi-weekly, semi-monthly, monthly" loans can range from 14 days to 33 days. For the "weekly" type of loan the time ranges from seven days to 21 days. This type of flexibility can be the make or break help that can get a borrower out of debt.
Most people that take a payday loan will owe the money back on their next payday, and this usually creates a difficulty for the borrower. Even though the borrower signed on to the deal knowing the repayment date would very quickly descend on them (namely, the next time their employer pays them) it doesn't change the fact that it creates a problem. Most people have a large part of their pay from work scheduled for rent, bills, food, gas, or some other necessity. The payday loan (the principal and the finance fee) are both due on the morning of that payday. The borrower, through the quickness of the ACH transaction by the lender, pays back the loan before they buy anything else with their earnings. That's going to be a problem because all of those regular costs of life are still in place.
This is why so many borrowers just pay the finance charge and roll the loan over. And this is why when a company like Target Cash Now offers some flexibility (read that as added days increasing the duration of the loan term) it is quite valuable. A borrower that can stretch the due date of a loan out over two of their pay periods has a much better chance of saving enough money to put a big dent in the outstanding principal of the loan, or perhaps even knock out the loan altogether. Either way, the ability to save some money over two pay periods is obviously better than trying to save all the money needed from a single pay period.
If you borrow from Target Cash Now should you push for the full 33 days? My answer is why not? If the firm feels this is too long of a time then they could try to bring you down. But I would definitely fight to get at least 28 days on the loan which for most people incorporates two pay periods. This will give you a chance to "pull" or save enough money from the two pay frames to repay the loan.
It's interesting to look at the fee schedule provided by Target Cash Now. The shortest term of the 'bi-weekly' loan is 14 days which carries an APR of 782% but if you lengthen that loan to 33 days (which would then classify the loan as a monthly loan) then the APR drops to just under 332%. Quite a big difference. Quite a valuable difference, especially for someone who has precarious finances.
There are a few other factors that make Target Cash Now a better option than most other tribal lenders. The company offers loans that range from $100 to $1,000. And there are now first time borrower limits listed at the firm's site so we can assume that as long as you qualify (with your earnings) the $1,000 amount is available to first time borrowers. Also, the company has purchased some excellent website security through VeriSign, so the data you provide when you apply will be safe.
Target Cash Now is a relatively smaller player when it comes to tribal lending, but they should be better known. They offer loan products that are superior to many other internet lenders. There short-term loans are still expensive but the days of comparing these higher rates to "traditional" loans because those days are gone. There is no such thing as traditional loans now, we should re-classify them as "extinct" loans because they are just not to be found now, at least not in the U.S.
If you are shopping for a short-term loan check out Target Cash Now. I think the "Target" part of their name is really appropriate, because they allow the customer to target the calendar dates for repayment that fit their situation. This is valuable and should not be overlooked when looking for a loan.
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Posted by: Anne | 12/20/2013 at 03:32 AM
Does this matter? Variable rates = all high costs no matter what
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Posted by: Trent Lowes | 12/23/2013 at 12:35 AM
Target Cash? I wonder if they are part of the Target retail company? I guess not if they are tied to the tribes lending, I doubt Target would get involved with any Indian. It's just funny that they took the name, wonder if they hoped to piggyback the name of the retailer.
Posted by: Jessica | 12/25/2013 at 04:15 PM
Target Cash Now was good to me, I know people complain but I would vote yes for them.
Posted by: Isabelle | 12/28/2013 at 11:12 AM
It doesn't matter that it's a variable rate because the rate is always expensive.
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