4 ms·

It seems like this should be a huge opportunity for someone to come in and optimize things. The "pay day advance" stuff seems particularly wasteful and general

It seems like this should be a huge opportunity for someone to come in and optimize things. The "pay day advance" stuff seems particularly wasteful and generally awful. Even my credit card company won't charge me $50 to front me $300 in cash. Hell on a clean card with one of those "0% APR for 6 months" I could probably cut myself a 3k bridge loan and pay almost nothing. (assuming I just pay minimums and then if the 0% APR expires I clear the balance).

ryanwaggoner 17y ago
Those 0% intro rates rarely apply to cash advances.
- sp332 17y ago
  Yeah, but sometimes they do.
  - ijuhytgjh 17y ago
    And the middle class people know how to get around that by buying items and returning them for cash or other tricks to let you borrow $10,000 on various interest-free cards. Then put it into a savings account and use the interest to pay for the holiday.
chollida1 17y ago
> Even my credit card company won't charge me $50 to front me $300 in cash. Yes, but the credit car company has allready screened you and determined that you aren't a large risk to default. The people who use payday loan services are statistically much more likely to default on their payments or to try and cash bad cheques.
JimmyL 17y ago
If you're the kind of person that needs to go to a payday loan place, you're not going to be eligible for a 0% APR card - if you're lucky, you'd be offered a fully-secured credit card (meaning you have to give them money first before you can use it, and you can only use up to the amount you've given them) with a maximum balance of five hundred bucks, which you wouldn't have lying around anyways. You get those card offers now because you're (presumably) employed to some degree and have a decent credit rating, so the card company thinks you're a pretty good bet to not default. If you need a payday loan, it's unlikely you have anything near a good credit rating, if you have one at all. As for optimizing things, it depends on who you want to optimize for. If you want to optimize it for the credit card and payday loan companies, that's pretty much been done already - they have a very permissive set of regulations they operate under, and aren't short on profit margin. If you want to do it for the customers, that means you need to set up a financing service aimed at high-risk individuals, but you're going to have to mark-up some to make up for the default rate. A good deal of people who frequent payday loan companies can't even get it together (for whatever reasons, both in and out of their immediate control) to get a normal checking account - you think that they'll be offered no-interest unsecured credit cards?
- adatta02 17y ago
  @optimizing why not do something like a fresh fruit/vegetable cart that rolls through every morning at say 8am. The cart is actually backed/financed/supported by some bigger "rich folk" store (Shaws/Krugers/whatever) and is only available from 8am to 10am. This, theoretically reduces the "cost of doing business" since the likely hood that you get mugged for vegetables and fruit in broad daylight is probably pretty low. Following from the article, low cost of doing business should mean lower costs - even if you factor in gas and such you should still be able to beat the corner market and cut a profit since you are selling "big box" product at a markup...

ryanwaggoner 17y ago

Those 0% intro rates rarely apply to cash advances.

sp332 17y ago
Yeah, but sometimes they do.
- ijuhytgjh 17y ago
  And the middle class people know how to get around that by buying items and returning them for cash or other tricks to let you borrow $10,000 on various interest-free cards. Then put it into a savings account and use the interest to pay for the holiday.

chollida1 17y ago

> Even my credit card company won't charge me $50 to front me $300 in cash. Yes, but the credit car company has allready screened you and determined that you aren't a large risk to default. The people who use payday loan services are statistically much more likely to default on their payments or to try and cash bad cheques.

JimmyL 17y ago

If you're the kind of person that needs to go to a payday loan place, you're not going to be eligible for a 0% APR card - if you're lucky, you'd be offered a fully-secured credit card (meaning you have to give them money first before you can use it, and you can only use up to the amount you've given them) with a maximum balance of five hundred bucks, which you wouldn't have lying around anyways. You get those card offers now because you're (presumably) employed to some degree and have a decent credit rating, so the card company thinks you're a pretty good bet to not default. If you need a payday loan, it's unlikely you have anything near a good credit rating, if you have one at all. As for optimizing things, it depends on who you want to optimize for. If you want to optimize it for the credit card and payday loan companies, that's pretty much been done already - they have a very permissive set of regulations they operate under, and aren't short on profit margin. If you want to do it for the customers, that means you need to set up a financing service aimed at high-risk individuals, but you're going to have to mark-up some to make up for the default rate. A good deal of people who frequent payday loan companies can't even get it together (for whatever reasons, both in and out of their immediate control) to get a normal checking account - you think that they'll be offered no-interest unsecured credit cards?

adatta02 17y ago
@optimizing why not do something like a fresh fruit/vegetable cart that rolls through every morning at say 8am. The cart is actually backed/financed/supported by some bigger "rich folk" store (Shaws/Krugers/whatever) and is only available from 8am to 10am. This, theoretically reduces the "cost of doing business" since the likely hood that you get mugged for vegetables and fruit in broad daylight is probably pretty low. Following from the article, low cost of doing business should mean lower costs - even if you factor in gas and such you should still be able to beat the corner market and cut a profit since you are selling "big box" product at a markup...