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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
by 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 agoOften, 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 agoOkay, 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 agoYes, 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.