There are several issues to address here.
1) Delivery: Did the customer pay twice for delivery? (Cash directly to driver as well as financed amount to company). Has this been sorted out?
2) Interest rate: I put the payments into an interest rate calculator and IF the mattress will be fully paid off at the end of a year - which is not clear to me because of the very (apparently purposefully) blurred lines between leasing and financing a purchase - then the claimant will have financed a mattress at 122.657%.
| Interest Rate | 122.657% |
| Total of 12 Monthly Payments | $2,236.08 |
| Total Interest Paid | $980.08
|
Where I come from this is called usury and is prohibited, but in several US states its called an unsecured payday loan. Buying a mattress, which can be repossessed, is not an unsecured loan. Whether this is legal or not is going to depend on the state the claimant lives in but I would encourage her to find out.
3) Electronic signature: Electronic signatures are binding, but come ON. The claimant would have been signing on a little machine in a store after a doubtless grueling session with a mattress salesman. A full paper copy should have been provided, with the customer initialing ALL relevant clauses on an original and copy. Cancellation should have been permitted after review.
4) Were disclosures properly made and initialed? E.g.
Option A: Same as cash, no interest, if $1,256.03 is paid in full by X (100 days from today)
Option B: After X, interest rate of 122.657% will apply to full balance and full term. After 12 months you will have paid $2,236.08 and will own your mattress.
Option C: Lease only. If you do not want to own this mattress you will pay $186.34 for a minimum term of X and return it on X.
5) Statements: Statements can be sent either by email or mail, but they should be sent, and the customer should specifically decline paper copies.
My only suggestion for resolution would be that Snap Finance should reduce the rate. At 27% - which is a very healthy rate, and still possibly illegal depending on the borrower's location, to get from someone who's been paying diligently - the total sum paid out should be $1,447.21. Claimant should pay the difference between what she has already paid and that total. But if 27% is an illegal rate in her state, it should be reduced further.
Also, unless anything said here is materially wrong, Snap Finance may want to review its business practices. There's legal and then there's ethical.