Well actually I have many, but here are the main two:
The small print at the end stipulates a 99.25% (?!?!?!) interest rate. It then goes on to say that on a typical $2600 loan you’ll make 42 payments of $216.55. That works out to about $9100. Isn’t that a fuck sight more than $2600 x 1.995? How is this math supposed to work?
APRs aren’t a one-time deal. First month, you get hit with a month’s worth of that 99.25% (call it 8%), added to your balance. Amusingly, that works out to maybe a buck or two less than that payment–so for that month, you’ve paid back one or two dollars of that wonderful $2600 loan. (That’s just a very lazy eyeball estimate. You just don’t want to look too closely into a hideous car crash of the math of a loan like that.)
The next month it happens all over again, and so on. It compounds. This is also why (just more a much more extreme version of) only making minimum payments on credit cards can rapidly fuck people over with poor budgetary control/circumstances, as it turns sisyphean–the boulder keeps rolling back almost the same distance it gets pushed up the hill.
It’s legal because if they made it illegal, Gary Coleman would personally break the knees of every legislator responsible for so doing.