Google bans high interest rate personal loan apps from its app store

[Shawn Knight]

In brief: Google is cracking down on apps that help consumers acquire high interest rate personal loans. In the US, the search giant now prohibits apps that enable personal loans with an Annual Percentage Rate (APR) of 36 percent or higher.

Google defines a personal loan as the lending of money from one individual, organization or entity to an individual consumer for any purpose aside from purchasing a fixed asset or education. A personal loan can include a payday loan, a peer-to-peer loan or a title loan but not a mortgage or a student loan.

Personal loan apps must, among other requirements, display the maximum APR as well as the minimum and maximum period for repayment. Google also doesn’t allow apps that require repayment in full within 60 days. The policy applies to apps that offer loans directly as well as third-parties that help to generate leads and connect lenders with consumers.

A Google spokesperson told The Wall Street Journal that their policies are designed to protect users and keep them safe, adding that they expanded their financial-services policy to protect people from deceptive and exploitative personal loan terms.

Indeed, loans with such high interest rates often fall into the category of predatory lending in which the lender uses unfair or deceptive practices to take advantage of the borrower. Borrowing money, period, is a surefire way to throw a monkey wrench onto the path to financial freedom but doing so at an unreasonable interest rate only adds fuel to the fire.

If your back is against the wall and you’ve exhausted all other options, at least consider the interest rate before giving your John Hancock.

Masthead credit: Loan by one photo

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https://www.techspot.com/news/82333-google-bans-high-interest-rate-personal-loan-apps.html

 

[mbrowne5061]

"Borrowing money, period, is a surefire way to throw a monkey wrench onto the path to financial freedom but doing so at an unreasonable interest rate only adds fuel to the fire."

Wut?

The second half of the statement is true, but there is a reason why mortgages and students loans were excepted from the policy - and it isn't because of "big loan".

A mortgage allows you to purchase equity with capital that you don't yet have. If you fail to pay back that loan, the borrower declares bankruptcy and the lender gets the capital. For student loans, where the loan still facilitates in increase in wealth but lacks a backing piece of equity, the loans cannot be discharged via bankruptcy and instead are insured by the government (technically, for govt. student loans, the govt is the one loaning the money through a third party).

Borrowing money you cannot afford to repay is a surefire way to get in trouble - and that is why payday loans aren't a good thing to take out. They literally calculate a rate against the principal that will make it all but impossible for you to pay back the principal - netting them an income stream for the foreseeable future.

But when you calculate out the principal and rate based on income (like with a mortgage) the risk is kept to very manageable levels.

 

[EClyde]

What's to high? 21%

 

[trparky]

What's to high? 21%

I'd say that it's getting into loanshark territory.

 

[Theinsanegamer]

"Borrowing money, period, is a surefire way to throw a monkey wrench onto the path to financial freedom but doing so at an unreasonable interest rate only adds fuel to the fire."

Wut?

The second half of the statement is true, but there is a reason why mortgages and students loans were excepted from the policy - and it isn't because of "big loan".

A mortgage allows you to purchase equity with capital that you don't yet have. If you fail to pay back that loan, the borrower declares bankruptcy and the lender gets the capital. For student loans, where the loan still facilitates in increase in wealth but lacks a backing piece of equity, the loans cannot be discharged via bankruptcy and instead are insured by the government (technically, for govt. student loans, the govt is the one loaning the money through a third party).

Borrowing money you cannot afford to repay is a surefire way to get in trouble - and that is why payday loans aren't a good thing to take out. They literally calculate a rate against the principal that will make it all but impossible for you to pay back the principal - netting them an income stream for the foreseeable future.

But when you calculate out the principal and rate based on income (like with a mortgage) the risk is kept to very manageable levels.

Indeed, the author seems to be from the school of "david ramsey", despite the fact that Ramsey's plan already works if you are already independantly rich. Debt, when leveraged correctly, is a fantastic method to obtain wealth and grow one's assets. Ask any major corporation or multi millionare, all of them use debt to their advantage.

Now short term debt is a bad idea, it costs tons of money for no long term advantage. Honestly, I'm in favor of predatory loans being removed from the store, it is way too easy for them to take advantage of people in bad situations and rob them of their money. The act of going to the store and signing the papers makes people double think the situation over, you dont get that from a phone screen.

Techspot should really keep these opinions in the "Editorial" section, and out of articles.