Short on cash? A 70.68% APR should fix that! From US Bank.

[Syonyk]

**sigh**

Just got this bit of rubbish in my inbox - from my bank.  Who, in theory, knows that I have a 25k line of credit with them at 7.5%, and a checking account balance quite a bit higher than they're offering me as a quick loan.  And, sadly, I have an ability to do math.

Such simple!  Much wow!  Only $12 per $100 borrowed, for a 3 month loan.  None of those nasty APR calculations!

Ugh.

Just a few dollars short? There's a loan for that. Small dollar loans between $100 and $1000!
 
Dear [Syonyk],
 
Exclusively for you, we're introducing a small dollar loan. Use a small dollar loan to borrow between $100 and $1,000 for three months. Even if you have less than perfect credit, the small dollar loan is a clear option when you need money quickly.
 
•   Simple loan pricing. No hidden fees. You'll pay just $12 in financing for every $100 you borrow. For example, a $500 loan costs $60.
•   Prompt loan decisions. You can apply in minutes and, if approved, get fast access to your funds via direct deposit.
•   Convenient repayment methods. Three fixed payments make planning your monthly expenses easy.
 
The loan is a high cost form of credit and more affordable options may be available, if you qualify. See www.usbank.com for options.
 
Don't wait! This offer expires January 31, 2017

This invitation to apply is intended for addressee only, eligibility is non-transferable. Program is available from October 3, 2016 to January 31, 2017 and may be discontinued at any time without prior notice. Only one loan per person is available during the program time frame. A finance charge of $12 per $100 borrowed will result in an APR of 70.68%. Loan terms example: loan amount $100 to $1000; loan term 3 months; fixed monthly payment amount $37.33 - $373.33. Program subject to eligibility and credit approval. A lower finance charge may apply for active duty Service members and dependents. Some additional restrictions may apply. Program is a high cost form of credit and more affordable options may be available, if you qualify. See www.usbank.com for options.
 
Installment loans are offered through U.S. Bank National Association.

[slugline]

Payday loan borrowers would call that a steal . . . whenever they get around to doing the math I guess. . . .

[Slee_stack]

At least its a 'clear option'!  That counts for something right?

[Chris22]

Stupid, but why apply an APR to a 3-month loan? 

[Half-Borg]

The loan is a high cost form of credit and more affordable options may be available

You mean like ... I dunno ... NOT BUYING CRAP YOU CAN'T AFFORD?

[Travis]

Stupid, but why apply an APR to a 3-month loan?

Legal disclosure?

[Syonyk]

The loan is a high cost form of credit and more affordable options may be available

You mean like ... I dunno ... NOT BUYING CRAP YOU CAN'T AFFORD?

Woah, woah, there.  This is America, and you are all consumers.  Not much of a consumer if you can't buy stuff, are you?

I am curious how one gets from a $12/$100 fee to 70% APR, though.  By my back of the envelope calculation, $12 for 3 months would expand linearly to $48 for 12 months, or about a 50% APR, not 70%.

But doing APR calculations on scummy loans isn't something I've much experience with.

[Half-Borg]

The loan is a high cost form of credit and more affordable options may be available

You mean like ... I dunno ... NOT BUYING CRAP YOU CAN'T AFFORD?

Woah, woah, there.  This is America, and you are all consumers.  Not much of a consumer if you can't buy stuff, are you?

I am curious how one gets from a $12/$100 fee to 70% APR, though.  By my back of the envelope calculation, $12 for 3 months would expand linearly to $48 for 12 months, or about a 50% APR, not 70%.

But doing APR calculations on scummy loans isn't something I've much experience with.

There is a 20% bad-at-math tax factored in.

[frugalnacho]

Stupid, but why apply an APR to a 3-month loan?

Apples to apples comparison with other loans.  Also they are probably legally required to disclose it.

The loan is a high cost form of credit and more affordable options may be available

You mean like ... I dunno ... NOT BUYING CRAP YOU CAN'T AFFORD?

Woah, woah, there.  This is America, and you are all consumers.  Not much of a consumer if you can't buy stuff, are you?

I am curious how one gets from a $12/$100 fee to 70% APR, though.  By my back of the envelope calculation, $12 for 3 months would expand linearly to $48 for 12 months, or about a 50% APR, not 70%.

But doing APR calculations on scummy loans isn't something I've much experience with.

M = P*(r(1+r)^n)/(((1+r)^n)-1)

P= principal ($100)
r = rate (70.68%/100/12months = 0.0589)
n = number of payments (3)

M = 100*(0.0589(1+0.0589)^3)/(((1+0.0589)^3)-1) = $37.33

If you borrow $100, and make 3 payments of $37.335 You pay back $112.00. 

You can also punch it into a mortgage calculator or spreadsheet and just set the loan term to 0.25 years to get the same results.

EDIT: typo

[El Marinero]

Frugalnacho  got it right.

The APR is 70.68% instead of 48% because the outstanding balance is being reduced by monthly payments.  And I'll bet there's a hefty penalty is if you miss a payment.

This is just financial evil.  It's hard to imagine this loan making sense for anyone.

[Chris22]

Stupid, but why apply an APR to a 3-month loan?

Apples to apples comparison with other loans.  Also they are probably legally required to disclose it.

I know, I just can't get spun up by it.  The percentages are large but the dollars aren't.  It's like the other day, a coworker and I went out for lunch, he had a coupon and I picked up the bill.  It was $8 for two hamburgers.  He gave me $4, which I just threw on the table as the tip.  "That's a 50% tip!" "it's $4."

To me, student loans of $100k at 8% for 20 years are way more scary than $1k at 70% for three months.

[frugalnacho]

Stupid, but why apply an APR to a 3-month loan?

Apples to apples comparison with other loans.  Also they are probably legally required to disclose it.

I know, I just can't get spun up by it.  The percentages are large but the dollars aren't.  It's like the other day, a coworker and I went out for lunch, he had a coupon and I picked up the bill.  It was $8 for two hamburgers.  He gave me $4, which I just threw on the table as the tip.  "That's a 50% tip!" "it's $4."

To me, student loans of $100k at 8% for 20 years are way more scary than $1k at 70% for three months.

http://www.mrmoneymustache.com/2011/08/01/a-millionaire-is-made-ten-bucks-at-a-time/