Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Sure there is ,banks won't do business with such credit risks nor why should they.
You keep wanting the world to drop the bar to your level. But that isn't going to happen ,you have to come up to the level you need to or suffer the consequences of failing.
Pay attention, sheesh. Some banks have been in the payday loan business for years, e.g. they fund payday lenders. So there are lenders who are getting the benefit of .01 bank dollars while not passing the savings to their customers.
when someone feels desperate enought to take one out, they want to pay it off and be done with it
if someone ever become a "good customer" at a payday loan store that;s a problem in itself...means your caught up in the cycle
no need to reduce rates, these are bad credit short term loans... if you have good credit you can go to a bank
actualy you wouldnt even need to go to the bank. many chking accounts will allow you to make a "cheaper" cash advance thru online banking into your chkn acct if you have direct deposit
That is truly a remarkable statement.
These loans are structured to take six to twelve months to retire, that's not long term?
Why can't they offer longer term, fully amortized loans? Even an 84-day loan might reduce default risk per week, since that spreads the payment out over 6 pay periods for those getting paid once every two weeks. It also spreads out the costs of creating the loan.
Of course rates would still be exorbitant, but less so, perhaps 100% APR instead of 380%.
Actually, in many states it is illegal to offer more than X days on a term loan without getting classified as a different type of lender and having to play by a different set of rules.
Quote:
Originally Posted by rdflk
I suppose they could. But they don't have to.
They have a business model that works for them.
If you don't want to get a loan from them go elsewhere.
If that's your ONLY option...well that's unfortunate....but asking why can't they charge less.....
That's like asking why can't Macy's lower its prices. I suppose it could.
But shoppers could also go to Target...and many do.
(I'm stepping out on a limb here but corporations have shareholders, I don't know if they're allowed to intentionally make LESS profit....... I think that would be tricky when they're obligated to grow the company, and increase the shareholders investment.)
There is always the grocery store model. Low prices, but high volume.
Quote:
Originally Posted by mathjak107
reuters looked in to the default rate and explained it this way:
Think of it this way: what happens when you lend 100 people $500 each, for one year, at 10% interest, with a 10% default rate? You start the year with $50,000. You end it with 90% of the loans paid back — that’s $45,000 — and another $4,500 in interest on those loans, for a total of $49,500. And you also have $5,000 of defaulted loans, which are worth say 25 cents on the dollar. Which means you make a total profit of $750.
On the other hand, what if the term of the loan is six months, but the 10% default rate stays the same? Then after six months you’ve got $45,000 back, plus $2,250 in interest, for a loss of $2,750. And if you run the same program again in the second half of the year, you’ll lose another $2,750. Instead of being down $500, you’re down $5,500. Yes, you’ve now got $10,000 in defaulted loans rather than $5,000. But even so, you end the year with a loss of $3,000.
The point here is that defaults aren’t evenly distributed: instead, they’re highly front-loaded. If you haven’t defaulted in the first six months of a one-year loan, you’ll probably pay it off: the probability of default is always highest at the very beginning. And so if you lend for shorter periods rather than longer periods, you have to increase the interest rate you charge, just to make up for the fact that the default rate is not going to fall. Which is the opposite way round to how yield curves normally behave."
We still aren't talking about a 72% failure rate. The interest rate has to be higher to cover the failures, but 10% is 10%. 6% is 6%. A 10% failure does not magically translate to 72% failure rate.
Pay attention, sheesh. Some banks have been in the payday loan business for years, e.g. they fund payday lenders. So there are lenders who are getting the benefit of .01 bank dollars while not passing the savings to their customers.
No they aren't. I can practically guarantee it. The payday loan place is getting a retail price, but the bank is getting the Fed funds rate.
These loans are non collateralized, so the number of times you take out such a loan and pay it back isn't going to result in a lower interest rate even with an impeccable record of repaying them.
Actually, in many states it is illegal to offer more than X days on a term loan without getting classified as a different type of lender and having to play by a different set of rules.
There is always the grocery store model. Low prices, but high volume.
We still aren't talking about a 72% failure rate. The interest rate has to be higher to cover the failures, but 10% is 10%. 6% is 6%. A 10% failure does not magically translate to 72% failure rate.
i didn't mean to say the failure rate jumps i said it takes effectively 72% a year in interest to stay solvent.
These loans are structured to take six to twelve months to retire, that's not long term?
um, a "payday" loan is 14 days or to coincide with your next payday... people are paid weekly, biweekly, twice a month, or once a month
a 6 month or 12 month loan is an installment loan
if someone takes out a pdl the intent was because they were short on cash and didnt have an alternative. and in their mind they would pay it back when they get paid
if someone doesnt pay it back or just pay interest on it and prolong in for a rediculous amount of time then thats on them
um, a "payday" loan is 14 days or to coincide with your next payday... people are paid weekly, biweekly, twice a month, or once a month
a 6 month or 12 month loan is an installment loan
if someone takes out a pdl the intent was because they were short on cash and didnt have an alternative. and in their mind they would pay it back when they get paid
if someone doesnt pay it back or just pay interest on it and prolong in for a rediculous amount of time then thats on them
The reality is that the average loan takes ten months to retire; the lenders know exactly how it works for them. When people on the economic margin repay these loans, they are left with not enough money to both pay the rent and to keep the lights on, so they roll over the loan for another month.
That is not sustainable for the borrower, so it is hardly surprising that there are defaults.
My landlord refinanced his mortgage and saved $300 a month; I need a refii as well.
What would refinancing one's rent entail?
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
