Miami Sports and Entertainment Lawyer comments on the recent trend of NFL players seeking High Interest Loans during the lockout.
As the NFL lockout enters yet another month, players from at least 16 teams have already sought out extremely aggressive short-term loans with high interest rates, ThePostGame.com has published.
These interest rates range from 18 percent to 24 percent, and upon default, they can rise as high as 36 percent.
“There are a lot of people out there pitching these things,” said Aaron Resnick, Esq., who has advised players on such loans. “It’s almost predatory lending. It’s people going to guys who they know are already in debt, or don’t have the ability to pay their bills during the year and [lending them money] at such obscene terms, that you say, ‘Hey, no one would ever sign something like this.’ But a lot of players are.”
How many players actually need substantial funding at this moment?
“Having [$250,000 to $500,000] to spend or invest — sure, it’s a nice thing,” he said. “But you can get taken advantage of, especially when you’re talking about guys in their twenties. There’s no handbook on how to handle yourself, so you learn some things along the way, and hopefully you don’t lose too big.”
And while there is the question of how many players actually have a need for the funds being secured, multiple sources tied to players have told ThePostGame.com there are already some players in dire financial need. And absent an influx of cash, they will find themselves in precarious financial situations.
Some players depend on teammates and other players to shore up any short-fall during the off-season. But because of new belt-tightening, player-to-player lending has dried up.
A spokesperson for the NFLPA declined comment on the high-risk loans players are securing. But at a time when the players are engaged in a financial war of attrition with the owners, the fact that players are already in need of funding — after only one month of lockout negotiations — appears troubling. And the longer the lockout drags on, the greater the percentage of players who will aggressively seek out needed revenue. And that aggressive pursuit could eventually have long-term consequences.
“What’s going to happen here, and it’s going to happen to a lot of people, is these guys who are getting loans aren’t going to have the means to pay them back”. “They’re going to lose their homes. Their credit is going to be shot.”
“It’s unfortunate and not the way it should be, but it is the situation we find ourselves in.”