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>It was the third loan that upended his life. He needed it to top up his rent, because by then a vicious cycle had begun, wherein he would pay off his loan then
by nimbius 6y ago
>It was the third loan that upended his life. He needed it to top up his rent, because by then a vicious cycle had begun, wherein he would pay off his loan then borrow again to fill the hole that the last
payment had left in his finances.
So this is just a Payday lender that thinks the potential for a shamed and disgruntled foreign national to clean out it's office with a machete is just too far removed...
- toomuchtodo 6y agoTraditionally, peer pressure and social mores are a proven path to high repayment rates for micro lending in the developing world (which already have usury rates, mind you). This just streamlines the process. https://www.vox.com/future-perfect/2019/1/15/18182167/microcredit-microfinance-poverty-grameen-bank-yunus https://www.vox.com/future-perfect/2019/1/15/18182167/microc... Control F “Grameen Bank”, although the entire piece is very informative on the topic.
- thoughtstheseus 6y agoDoes it matter that the pressure is from software vs. people?
- cortesoft 6y agoThe pressure isn’t from the software, it is from the people the software sends messages to.
- JMTQp8lwXL 6y agoThe longer the debt remains outstanding, the more the lender can collect due to accumulating interest. You almost would want to avoid the peer pressure, so long as some sort of payment is regularly made.
- dheera 6y agoRight, in a lot of developing parts of the world, the concept of social credit is huge. Your ability to succeed in life is far more dependent on who you know that trusts you, than your own skills as an individual.
- rsynnott 6y agoNot sure how likely someone committing mass murder over debt is...
- w-j-w 6y agoSeems like one of the more plausible reasons to me. Especially when public shame is involved.
- warent 6y agoTax liabilities was enough to set one guy over the edge. People don't like feeling backed into a corner, and some people respond with unfathomable violence. https://en.m.wikipedia.org/wiki/2010_Austin_suicide_attack https://en.m.wikipedia.org/wiki/2010_Austin_suicide_attack
- JackFr 6y agoAlong with all of the obvious badness, this simply seems like a terrible business model. It's a gun with one bullet. Ultimately the goal of collections, is to collect the money. After you've shot your wad, why would I ever pay you back? After 2-3 stories like this, why would anyone ever borrow? One of the hardest things with consumer credit is customer acquisition, and as OKash gains this reputation, they will only attract the most desperate, least likely to ever repay customers.
- crowf 6y agoI guess you would be surprised at the amount of people who borrow from people with an actual gun. The short explanation is that some people are really desperate for money right now.
- huac 6y agoI would expect the opposite to be true; if you are known to offer good rates but with onerous consequences, then your counterparties should self-select to be those who are likely to repay. Lower rates are simply your CAC.
- BoorishBears 6y agoExcept right in the article we see that people realize the system is easily gamed such that the consequences are trivial, causing the opposite effect. Not to mention the proof in the pudding of their credit losses...