“Buy here, pay here” car lots, payday and signature loan lenders all are big business in Oklahoma. In the nonprofit world, we call these companies predatory lenders. There is a distinct reason we consider them predatory. Like lions, they prey on people who can’t get away. Most of the time, a bruised credit report causes people to fall out of mainstream banking, thereby forcing them to utilize predatory lenders.  

In Oklahoma, there are more payday loan storefronts than McDonald’s and Wal-Mart’s combined. The loans they offer are usually less than two weeks in length and the entire balance of the loan plus a hefty loan fee is involved.

For instance, someone who borrows $200 will repay a minimum of $250.

That may sound expensive and it is. The way payday lenders make a profit is by lending to someone who does not have the money to pay off the loan. If the customer is unable to pay off the loan then the lender renews it and charges another $50 fee. A typical payday loan is renewed 10 times before it is paid off, which means that original $200 loan would generate $500 in fees.  

“Buy here, pay here” car lots have become increasingly popular too. Usually this type of dealership sells the car and makes the loan directly. Hence the name “buy here, pay here.”

These dealerships usually charge at least 21 percent interest and make a career of repossessing cars. What happens when they repossess a vehicle? It is refurbished, detailed, and sold again.  

Signature loan companies are different than a payday loan because they extend a longer term and have a lower APR. A signature loan has a term of 6-12 months and the APR is usually around 35 percent. Signature loan companies report positive payments to the credit bureau, but that also means they report negative information too. The payments on these types of loans are very expensive and most people find it difficult to work into their budget. This is why most people re-borrow the money before the loan is paid off, making the loan even more expensive.  

The Citizen Potawatomi Nation administration and the Citizen Potawatomi Community Development Corporation have been very aggressive in the fight against predatory lending. CPN offers a small dollar loan to its employees at a much lower cost than its predatory counterparts.  They also offer an auto loan to employees of the Nation. CPN Tribal members are offered free credit counseling and online classes through the CPCDC.  

For those rebuilding their credit, there is a credit builder loan that works like a prepaid loan. After the last payment is made, the proceeds of the loan are paid to the borrower.  The credit builder loan reports to the credit bureaus and, thus, helps the borrower build credit.

Predatory loans are not the only option for those with bad credit. If you would like more information about any of these programs please call 405-878-4697 or email info@cpcdc.org.