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Have any consumer advocacy-type people compared LendUp's APRs and terms with that of traditional payday loan companies? 203% to 755% APR for a first-time borrow

Have any consumer advocacy-type people compared LendUp's APRs and terms with that of traditional payday loan companies? 203% to 755% APR for a first-time borrower sounds comparable to what many others already offer. How much of a better deal are you getting? I would like to see payday/title loans and other debt traps legislated off the market completely, and at those APRs, I don't see how this is substantially different.

surrealize 11y ago
It looks like it's comparable for a first-time borrower, as you say, and then gets better as you build a history of repayment with them. I haven't used payday loan services myself, but from what I've read, I have an easy time believing that incumbents in that market don't use their own borrower repayment information very effectively.
- chrismartin 11y ago
  Often, people who fall into a debt trap start with just one reasonably small loan, a few hundred dollars for a few weeks. So if your first-time borrowers still pay 200-700% APR, then I don't see how offering lower rates to people who have demonstrated their ability to repay addresses the problem of people who are actually unable to repay falling into this trap to begin with.
  - surrealize 11y ago
    Okay, can we agree that lendup helps people who repay, and doesn't help people who don't? Relative to existing payday loan services.
    - chrismartin 11y ago
      Yes, I agree. The moral issue is allowing people to take out loans that they are unlikely to be able to repay, based on their personal finance history. I don't (yet) see how LendUp does a better job of that for first-time borrowers than any other payday loan company. Perhaps this is addressed by limiting the first-time loan amount to something small (like $250), and scraping the borrower's online banking statements as part of the approval process in order to predict (based on the account history) whether they are likely to be able to repay within a month. I don't know.
superuser2 11y ago
I'm pretty sure I got a 24% APR on my first credit card, $1000 limit. This was as a student with 0 history. This seems like an INSANE spread.

surrealize 11y ago

It looks like it's comparable for a first-time borrower, as you say, and then gets better as you build a history of repayment with them. I haven't used payday loan services myself, but from what I've read, I have an easy time believing that incumbents in that market don't use their own borrower repayment information very effectively.

chrismartin 11y ago
Often, people who fall into a debt trap start with just one reasonably small loan, a few hundred dollars for a few weeks. So if your first-time borrowers still pay 200-700% APR, then I don't see how offering lower rates to people who have demonstrated their ability to repay addresses the problem of people who are actually unable to repay falling into this trap to begin with.
- surrealize 11y ago
  Okay, can we agree that lendup helps people who repay, and doesn't help people who don't? Relative to existing payday loan services.
  - chrismartin 11y ago
    Yes, I agree. The moral issue is allowing people to take out loans that they are unlikely to be able to repay, based on their personal finance history. I don't (yet) see how LendUp does a better job of that for first-time borrowers than any other payday loan company. Perhaps this is addressed by limiting the first-time loan amount to something small (like $250), and scraping the borrower's online banking statements as part of the approval process in order to predict (based on the account history) whether they are likely to be able to repay within a month. I don't know.

superuser2 11y ago

I'm pretty sure I got a 24% APR on my first credit card, $1000 limit. This was as a student with 0 history. This seems like an INSANE spread.