That Loan You Found On TV May Cost You Five Times More Money

I understand you are having tough times and someone offers you money and you figure your budget and say, "Great! I can swing this every month!"

BUT what are you really paying??

For example, here is what a company called Western Sky Financial is offering:  "$10,000.00 deposited into your bank overnight." Thing is, who is Western Sky Financial and how much is your payback.

Western Sky Financial (WSK) is owned wholly by an individual tribal member of the Cheyenne River Sioux Tribe but is not actually owned or operated by the Cheyenne River Sioux Tribe or any of its political subdivisions. WSK is a Native American business operating within the exterior boundaries of the Cheyenne River Sioux Reservation, a sovereign nation located within the United States of America.

The interest rate on a typical loan of $2,600 is APR of approximately 139%. Borrowers may prepay their loans at any time without penalty. There are no upfront fees. If you are approved and your loan is funded, we will collect a $75 loan origination fee from the proceeds of the loan.

So let's break this down based on what is on their website WesternSky.com/General/Rates.aspx

Here are Western Sky's current rates.

For the amount of $2,600, they will deposit 2525.00 (a $75 fee to process the loan) into your bank at a rate of 139.22% APR.

Basically they want 47 payments of $294.46 with a total payback of $13,839.62

For your $2,525.00 loan, you pay end up spending, out of pocket, $13,839.62. That's over FIVE times what you borrowed.

Need another example? Say you want to borrow $10,000.00:

They deposit into your bank $9,925 (a $75 fee to process the loan)
You pay 89.68% APR.
They will have you pay 84 payments of $743.49.
Your total payback is $62,453.16 that is, once again, more than five times what you borrowed.

Still think it's a great deal?

If you think this is the only company do this you would be wrong how about these title loans.

Did you know that Tennessee has the highest interest rate for title loans (up to 22%) but the average is 13% per month? The average loan lasts 10 months so a $2,600.00 loan at 13% a month (assuming we just do a simple calculation) that would be 130% for a 10 month loan.

Really, people, why not just rework your budget? Move to a smaller home, eat a lot of soup, get a second or third job - find a way to live without! More than 20% of the people that get these loans lose their autos, boats, and motorcycles. The rest pay way more than they borrow. These places and companies are scary and I've seen a lot of people in trouble but I would never tell them to use any of these companies. There are better solutions to clear your debt that won't end up dragging you further down that rabbit hole. Talking to a tax or financial professional is the first step.

Does My Small Business Need Help From a Tax Professional?

It really is simple if you want to save tax dollars you hire someone that knows taxes. This is the same in most professions. I could most likely repair my vehicle but does that mean I am qualified to do it no. It is not only about preparation but also about arranging your money in a way so you can reduce you taxes and keep more of your hard earned money throughout your life. Also you need someone in your corner that can represent you if the internal revenue services decides they don't like something that you filed or if they need more information. This is why you hire a tax professional enrolled agent.

Give me a call at 615-367-0819 or email me at Friday {at} DrFriday {dot} com now and see how I can help you get your business up and running.

Could Your Beer Be Costing You Unnecessary Taxes?

New York's craft brewers say loss of tax exemption will cause beer prices to rise

As you hoist a beer this 4 of July (especially if it’s a made-in-New York craft brew), the state Brewers Association has a sobering message:

"The price of beer made by most of the state’s 90-plus craft brewers could be going up, perhaps by as much as $1 a pint for draft beer or $1 a six-pack."

The reason: A state court, in March, ruled a special excise tax exemption enjoyed by almost all of the state’s breweries is illegal. An out-of-state beer distributor had sued over the tax exemption, saying it placed an unfair cost burden on beers it hoped to sell in New York.

The brewers association is lobbying for bills being drafted by some state lawmakers that would restore the exemption while addressing the state Apellate Division’s legal concerns. The brewers hope the bills can be passed before the Legislature adjourns for the summer.

David Katleski, owner of Empire Brewing Co. in Syracuse and president of the state brewers association, said the exemption, which took effect in the late 1990s, has helped the state’s brewing industry double in size during the past decade.

The state’s 90 or so breweries and brewpubs pump $200 million into the state’s economy and employ more than 3,000 people, according to the brewers association. “The pace of growth for the brewing industry in New York has been phenomenal,” Katleski said. “But it could be hitting a wall with this tax issue.”

Some brewers faced with the new tax bills are beginning to scale back their expansion plans, Katleski said, even if they’re brewing at capacity and need to grow.

The exemption applied to any New York-based brewery that produces its beer in the state. It eliminated the excise tax on production up to 200,000 barrels a year. A similar exemption eliminated the $150 per brand label registration fee collected by the state, for New York-brewed brands that sell less than 15,000 barrels a year.

Only a handful of breweries in the state exceed those numbers or otherwise fail to qualify for the exemption. One of those is the Anheuser-Busch InBev plant in Lysander, which is oowned by a company based in Belgium.

Katleski said the loss of the exemption could cost his small brewpub in Armory Square about $20,000 a year and put a crimp in his plans to open a free-standing microbrewery in Cazenovia.

The much larger Brooklyn Brewery in New York City would have to pay more than $500,000 in excise tax without the exemption.

The current state budget was approved before the exemption was ruled illegal, so eliminating the tax would not cause any shortfalls in the state’s revenues, Katleski said.

What are your thoughts on this? Leave it in comments or email me at Friday {at} DrFriday {dot} com!