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They take extraordinarily high margins, often involving mis-representation to their customers along the way (largely by illustrating their fees as flat numbers,
by arkades 11y ago
They take extraordinarily high margins, often involving mis-representation to their customers along the way (largely by illustrating their fees as flat numbers, which obfuscates that if you translate it into actual APR terms - to compare to other lenders - they're asking for what equates to absolutely ridiculous interest rates).
Generally, if there's a demand for a service, people should come flooding in and reduce the marginal profits through competition. In this case, people came rushing in ... and profit margins went up over time. This alone, in a big picture perspective, suggests shadiness (though not by itself guaranteeing it, since you could argue for growth in demand outstripping the growth in supply).
- tamana 11y agoPay day lenders are required by law to publish APR. The ugly truth at the bottom of it is that their customers base is fundamental to stupid to know what is good for them, or too impulsive to make responsible choices, or too desperate to seek alternatives, or too ignorant to know their alternatives. Their are some easy improvements (education and outreach and banking programs for the poor and poorly educated) and some controversial ones (removing citizen's legal rights and freedoms to make self-destructive decisions)
- oli5679 11y agoI had a friend who worked for a UK payday lending company. The borrowing patterns of customers seemed hard to interpret as being in their long-term interests. Customer retention was too high and borrowing patterns too consistent for the loans to be primarily shielding customers from unexpected shocks rather than just punishing their lack of self-discipline.