Who is Mariner Finance, LLC?
Mariner Finance specializes in high-interest loans for desperate consumers. Under Kentucky law, Mariner Finance can charge simple interest of up to 36% per annum. But usually Mariner Finance will issue precomputed loans, which allows Mariner Finance to recover a much higher effective rate of return.
Pre-Computed interest is a method of calculating loan payments by taking all the interest that will be due over the term of a loan and adding it to the principal amount of the loan. The sum of the principal and interest over the life of the loan is called the “Account Balance.” Each monthly payment on a pre-computed interest loan is determined by dividing the Account Balance by the number of scheduled loan payments.[1]
The premium included in a precomputed loan is part of the “Finance Charge” for the loan. Under Kentucky law, the Finance Charge is considered to be the time-price differential as consideration for the loan. The Finance Charge in a precomputed loan is not interest.
The main difference between simple interest and the Finance Charge under precomputed loans comes with loan prepayment AND when you get sued to collect the debt.
When you prepay a simple interest loan, you pay off the remaining principal balance and any accrued interest. Remember we said that each payment reduces the principal balance of a simple interest loan, and that interest is calculated based on the reduced principal balance? Well in a prepayment, the principal balance becomes $0, so the interest due next payment is $0, too. You’re done. The loan is paid off and no more interest accrues.
When you prepay a pre-computed interest loan, you are paying off all of the “Account Balance.” (The Account Balance has all the principal and interest on the loan added together.) So when you prepay, you are entitled to a “Refund” of the interest charges that have not been “earned” by the lender – because you didn’t keep the money for as long as they thought you would when they pre-computed your interest.
Here’s why you should care. In a pre-computed interest deal, the methods used to determine your “Refund” of unearned interest charges (including an arcane formula called “The Rule of 78s”) results in most of the interest charges being deemed “earned” very early in the loan term.[2]
Mariner Finance is very aggressive when it comes to loan collection. Mariner Finance files hundreds if not thousands of lawsuits every year to collect defaulted loans.
When Mariner Finance sues to collect a precomputed loan, it can include a demand for interest, but it must rebate the unearned Finance Charge first and can only recover simple interest on the remaining principal balance. We’ve discovered that, in some cases, Mariner Finance has sued Kentucky consumers to collect defaulted loans without giving proper credit for the unearned Finance Charge. This allows Mariner Finance to charge interest on the remaining Finance Charge. Also, we discovered that Mariner has sued Kentucky consumers to collect interest in excess of the rate allowed by contract and/or by law. These are both violations of Kentucky law and are potentially actionable under Kentucky’s Consumer Protection Act.
The CFPB complaint data base includes 417 filed complaints against Mariner Finance. The BBB has a list of 209 filed complaints against Mariner Finance.
If Mariner Finance has sued you or is harassing you to collect a debt, please call or email us today. We may be able to help you at no up-front cost to you. We operate on a strict contingency basis such that we only get paid if we win or settle. If we don’t win or settle, you don’t owe us anything. You have nothing to lose and a lot to gain with a simple call to (502) 895-1144 or email to info@creditdefenseky.com.
[1] https://www.lendingpoint.com/blog/pre-computed-interest/
[2] Id.