Chuck Brennan is back to loan-shark in South Dakota again! After telling our fair state to kiss off, he has reopened two payday lending stores, in Sioux Falls and Rapid City, to peddle one-week “signature loans” for $250, $500, $750, or $1,000. Brennan’s Dollar Loan Center website offers this disclosure explaining the fees:
…Signature loan charges are based on a one week loan. The APR is [36.00%]. The actual APR on your loan may be higher or lower, depending on the amount you borrow. These calculations are based on an example of a one week loan. In a $500 loan scenario, the customer has a one time payment 7 days from the loan date. The amount of the finance charge is $3.45. Please note, the aforementioned finance charge is the total amount of interest that would be paid if the loan is kept out for the full one week term. Loans may be repaid early without penalty. Loan approval and loan terms are based on the lender’s underwriting standards and a review of the applicants’ creditworthiness. Applicants must provide proof of employment or reliable income and valid state issued I.D. Certain Limitations may apply. Late fees will be assessed if loan is not paid back within the one week term… [Dollar Loan Center, “South Dakota Signature Loans,” retrieved 2017.07.07].
Actually, Chuck, under SDCL 54-4-44, the actual APR cannot be higher than 36% depending on the amount the customer borrows. The 36% rate cap we voters merrily passed last year is pretty firm:
…no licensee may contract for or receive finance charges pursuant to a loan in excess of an annual rate of thirty-six percent, including all charges for any ancillary product or service and any other charge or fee incident to the extension of credit [SDCL 54-4-44].
That statute also seems to make clear that you can’t charge a late fee (a “charge of fee incident to the extension of credit”) on top of that 36% APR. I don’t think Chuck is setting up a financial service; he’s setting up a challenge to South Dakota law.