Americans are struggling. The cost of living is rising, and paychecks aren’t keeping up. For some, the month stretches further than the pay.
One lender taking advantage of this situation is OppFi, known as Opportunity Financial, which makes short-term installment loans at up to 195 percent annual percentage rate, or APR, according to the Center for Responsible Lending, or CRL, a consumer advocacy group.
“OppFi is charging interest rates that would make a loan shark blush,” Whitney Barkley-Denney, report co-author and senior policy counsel at the CRL, said in a statement. “OppFi traps people in debt with loans that blow way past the maximum interest rate allowed under most states’ laws.”
OppFi is an online company that says it offers simple and more affordable credit access to the 48 million everyday Americans who currently lack traditional options while rebuilding their financial health.
For its report, CRL relied on OppFi’s public securities filings, the complaint database of the Consumer Financial Protection Bureau, and anonymous transaction data from a national nonprofit.
These sources paint a striking picture of unaffordable loans, borrower churn, and a deepening debt trap, said Barkley-Denney. OppFi borrowers are already stretched thin, and the company saddles them with excessive interest rates that allow it to lend without regard to ability to repay.
About one third of OppFi’s loan portfolio is in default, and the majority of OppFi’s income comes from loan refinances, he said.
CRL’s analysis of the transactions uncovered examples of borrowers caught in an unaffordable cycle of refinancing, including cases of refinancing two to three months after taking out an OppFi loan, Whitney Barkley-Denney said. In addition, the data include many instances of OppFi borrowers also using other high-cost forms of credit, which demonstrates that OppFi contributes to the financial burden of borrowers trapped in an unaffordable debt cycl
