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What's the right price for short-term cash not secured by any assets for a customer who does not have any record of displaying creditworthiness?
by whatok 8y ago
What's the right price for short-term cash not secured by any assets for a customer who does not have any record of displaying creditworthiness?
- nimish 8y agoCertainly not bankruptcy or the use of public resources like courts to collect debts Predatory lending relies on an uninformed target.
- whatok 8y agoThat doesn't answer my question at all.
- nimish 8y agoIt does. The fair price of the loan is the price that doesn't cause social harm. The lender figures out how to translate that into APRs and possibly turn a profit, or perhaps there's no price that's profitable and socially good. That's perfectly fine.
- frgtpsswrdlame 8y agoIn a competitive market the right price would be one which generates a positive but very tiny profit. These big payday lenders make money hand over fist though.
- whatok 8y agoI agree with your first statement but do not have any aggregate numbers to argue against the second. Do you have any?
- vageli 8y ago> In a competitive market the right price would be one which generates a positive but very tiny profit. These big payday lenders make money hand over fist though. Is this not an inversion of the risk associated with these loans? It was my understanding that riskier loans are assessed at higher rates of interest _because of_ the likelihood of default. Thus, extract as much as quickly as possible before the default. How would companies profit if the successfully serviced loans did not offset the defaults, given these loans are not secured with another asset?
- ikeboy 8y agoWhy isn't the market competitive, then?