Should You Get a Short-Term Loan from the Dave App?
Turns out, that cartoon bear is charging CRAZY interest rates
Should you get a loan from a cartoon bear on your phone?
This is a question I asked back in January. The answer then was to proceed with extreme caution.
A new 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.
Consumer advocates suggest the Dave app may be technically better than a payday loan, but not by much:
“Traditional payday loans and traditional overdraft fees are so awful that it’s not hard to be a…
