Courts is hitting back against a claim that its “instant cash” loan offer is less attractive than it seems.
Trisha Tannis, managing director of Unicomer (Barbados) Ltd, which trades as Courts Barbados Ltd, insisted that the “Courts Ready Cash” offer rate is the lowest on the market, in response to an accusation that the company was charging customers too high an interest rate.
Through the programme, Courts’ “loyal” customers were sent cheques valued at between $500 to $1 000 redeemable in cash. The interest rate is 2.4 per cent with equal monthly payments of $191 for six months.
However, Grady Clarke, chief executive officer of Caribbean Credit Bureau Ltd, better known as Credi-Check, said the effective interest rate of the Courts loan worked out at close to 50 per cent.
“Based on my calculations,” said Clarke of the $191 for six months, “this amounts to a total of $1 146 being paid, and when you subtract the $1 000 principle, you are left with $146. If this represents the interest income that is charged on the loan over a six-month period, and the fact that the average balance of the $1 000 loan repaid in equal instalments over six months is $500, the effective interest rate works out to be close to 50 per cent.
“How many customers would actually know the true cost of borrowing?” Clarke said. He added that “customers have a right to repay the funds and have the loan cancelled if they were not aware of the cost”.