Dear Gene-Thomas,

My husband wants us to take out a loan with a company he said provides money for military of all ranks. We are living from paycheck to paycheck, and I’m afraid that taking out a loan will only make our financial problems even worse….Cynthia

Dear Cynthia,

When I went online and attempted to learn as much as I could about the loan company you mentioned in your letter, I discovered that it does not advertise its interest rates. The company simply advertises that its rates vary depending upon the amount and length of the loan. 

When I contacted the company by phone, I asked how much I would have to pay back at the end of two months if I took out a loan for $500.00. I was told by a loan officer that the loan is calculated at a rate of $1.24 a day for every $100 borrowed, and at the end of 60 days I would owe them $878.28. The loan would be repaid by having $219.57 deducted from four of my bimonthly paychecks. Consequently, in two short months the company would make almost $400 from this transaction! 

When I contacted a Credit Union used by many Navy families and asked how much I would have to pay on a two month $500 loan, I was informed that I would owe them $515.84, or only $15.84 in interest. Given the fact that the company with whom your husband has been talking charges around $362 more for the same two month $500 loan, one should not be surprised that it does not advertise its specific interest rates either online or in military oriented newspapers.

People employed by loan companies that charge such exorbitant rates have traditionally been known as “loan sharks” and should be avoided at all costs. The fact that these companies advertise in publications read primarily by military personnel and families, many of whom have children and operate on very limited incomes, makes their loan sharking all the more egregious.

In so far as financial problems are one of the primary contributing causes of divorces in the armed services, loan companies that attempt to “rip-off” military families by charging them exorbitant interest rates, as well as financial advisors that attempt to sell military personnel life insurance they don’t need or mutual funds with high front-loads, are no friends of military family life. 

Before taking out a loan of any type, purchasing insurance, or investing in mutual funds or stocks, speak with a reputable firm or informed individual that will not profit from your transaction. The “savvy” financial planning series of books by Ralph Nelson, as well as a chapter in my book entitled “Dollars and Sense,” are designed specifically to help military families make wise financial decisions. Many bases and organizations like the Navy and Marine Corps Relief Society also offer financial planning classes that can help prevent you from digging yourself into a deep financial hole. 

Have you ever been taken advantage of financially by a loan company, a car dealership, or an investment firm? Did someone ever talk you into buying a time-share, furniture, or something that you later regret purchasing? Are there companies you believe people should be warned about lest they be misled to believe that they are reputable simply because they advertise in military oriented publications? If so, respond to this article and let other military personnel and families learn from your experiences.
 
Gene-Thomas Gomulka
Author of The Survival Guide for Marriage in the Military available at www.plaintec.net
Have a question? Write Gene-Thomas at letters@plaintec.net