Dollar Loan Center is now under a Cease and Desist order from the State of South Dakota. The business tried out a new loan program, after interest rates were capped at 36 percent last year. We found out what caused the State to step in.
In July, the Division ran a small examination of a new loan program being offered in Sioux Falls and Rapid City. What they found led to a full investigation in August.
According to the Division’s findings, the loans had “unsound underwriting and insufficient repayment analysis”.
After late fees, some of the loans issued had Annual Percentage Rates ranging from 300 to 487 percent.
Under new laws, Dollar Loan Center only had permission to offer signature loans with maturities longer than 6 months. These new loans were actually adding on late fee interest just one week after being issued.
The Division of Banking says the new program was designed to incur late fees. Without them, the loans wouldn’t make money.
Dollar Loan Center is now prohibited from doing business in South Dakota. Any loans made after June 21 this year are now void and cannot be collected on.