Can a Cartoon Bear Help You Pay Rent?

It’s possible — but there are some strings attached

Andy Spears

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Email solicitation from Dave App

The Dave App is everywhere.

It’s the friendly cartoon bear with some extra cash to help you in a tight spot.

The latest campaign focuses on helping you catch up if you can’t quite pay your rent.

It all seems so easy.

Just get a cash advance right from your phone, pay your rent in full, and go on about your day.

Of course, it’s not free money.

A story from the L.A. Times digs deeper, explaining just how bad the fees associated with friendly, cartoon bear apps can be.

Here’s how the Times broke down the fees associated with a loan from Dave:

Given that the money had to be repaid in 12 days, the $5.99 fee and $2 tip, if considered as interest, cost Goad 122% on an annual percentage rate basis — a metric that helps compare the relative cost of loans. If he tipped $6.93, the company’s average in the first quarter, it would amount to an APR of nearly 200%. If he chose a 15% tip, the total cost would rise to $35.99 with an APR of 547% — corner payday loan territory.

In other words, if you’re a bit short on rent, a loan from a cartoon bear could make things worse. Now, you owe interest to this bear.

Plus, rent will come due again next month. Only now, you’ll have less available cash because you’ve paid back that super kind but very demanding bear.

Oh, and this is the same Dave App that uses gambling games to promote its short-term lending products:

Back in August of 2022, Dave ran a promotion where if you applied for a cash advance in the app, you could be entered to win $1000.

That’s one way to bump up loan applications so you can show investors there’s demand for your product.

It’s also a way to promote a lending product of questionable value and considerable risk to borrowers likely least able to meet the repayment terms that would make this a low-cost borrowing option.

In short: If a bear is handing out cash for rent, take a pass.

In other consumer finance news:

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Andy Spears

Writer and policy advocate living in Nashville, TN —Public Policy Ph.D. — writes on education policy, consumer affairs, and more . . .