I Applied For An Online Payday Loan. Here's What Happened Next
Payday lenders made about $49 billion in high-interest loans last year. More than a third of those loans were made online. I wondered what happens when you apply for such a loan, so I decided to find out.
In the course of reporting a story earlier this year, I logged on to a site called eTaxLoan.com and filled out an application.
I asked for $500 and, to be safe, I made up an address, a name (Mary) and a Social Security number. The site asked for more sensitive stuff — a bank account number and a routing number — and I made that up, too.
In spite of the made-up information, in less than a minute, I got a response.
"Congratulations. Tremont Lending has been selected as your lender and you have been pre-approved for a loan up to $750."
If I wanted to borrow $750 for a week, I would have had to pay $225 in interest. The site said that was an annual percentage rate of more than 1,300 percent.
I did not agree to take the loan.
But within minutes, my phone rang (I had entered my real phone number). It was a guy from Tremont Lending, in South Dakota. I told him I was a reporter, that I didn't really want a loan, and I figured that would be the end of it. But then, I started to get more calls.
"Hi, Mary. My name is Ethan, Ethan Foster, and I'm calling from InstaLoan. And this call is regarding the loan application which you put online. It has been successfully approved by our company as a personal loan."