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How likely was it for people who showed a steady history of repaying the loans to suddenly start defaulting at or near the average rates? The only moral way to

How likely was it for people who showed a steady history of repaying the loans to suddenly start defaulting at or near the average rates? The only moral way to conduct this business is for the funnel to move people into lower risk tiers in proportion to their demonstrated/historical levels of risk - funneling every customer forever backward into the highest risk pools is systemically bad (inefficient) as well as evil.

kbenson 8y ago
I'm not sure any specific rates. My exposure to that info (beyond what I might think to look up myself) was mostly through what changes they requested to the system which predictably were mostly about easing the application process, extending the ACH file generation to optimize submission of the transfers to send/receive money, and to provide accurate reporting of total system money in/out. Occassionally they would want to see state specific numbers in a custom report from some SQL query, but only very, very rarely would they want to see numbers on average/max time length of loans, and only ever when a regulator would spot check. If I recall correctly, the average length of the loans was over 3 months (with a 25% interest payment due every pay period or two weeks, if paid more frequently than that). I remember looking up the data occassionally, but it was a decade ago, so I don't trust my memory enough to be definitive about specific numbers. They did start moving people into a separate collections department after a while, but I'm not sure what process they used to do that. It could be they were more on the ball about not allowing laons to go as long as I remember or knew about, but the amount of times they failed in this and needed help finding this info was notable, and yet better reporting of this info was never requested, so it could either be human error on a regular basis (fairly believable given the people they hired), or lack of importance to them, or some combination thereof.

kbenson 8y ago

I'm not sure any specific rates. My exposure to that info (beyond what I might think to look up myself) was mostly through what changes they requested to the system which predictably were mostly about easing the application process, extending the ACH file generation to optimize submission of the transfers to send/receive money, and to provide accurate reporting of total system money in/out. Occassionally they would want to see state specific numbers in a custom report from some SQL query, but only very, very rarely would they want to see numbers on average/max time length of loans, and only ever when a regulator would spot check. If I recall correctly, the average length of the loans was over 3 months (with a 25% interest payment due every pay period or two weeks, if paid more frequently than that). I remember looking up the data occassionally, but it was a decade ago, so I don't trust my memory enough to be definitive about specific numbers. They did start moving people into a separate collections department after a while, but I'm not sure what process they used to do that. It could be they were more on the ball about not allowing laons to go as long as I remember or knew about, but the amount of times they failed in this and needed help finding this info was notable, and yet better reporting of this info was never requested, so it could either be human error on a regular basis (fairly believable given the people they hired), or lack of importance to them, or some combination thereof.