Is there a market for Pay-Day Loans?
- Thread starter Tmccus2000
- Start date
There is almost certainly a market for them, but competing against the big boys would be very hard as their marketing budgets are huge.
On a personal note I think they should be outlawed, they are designed to prey on the destitute poor and those too stupid to know better and simply escalate the downward spiral of negative finances with interst rates of 2000%
On a personal note I think they should be outlawed, they are designed to prey on the destitute poor and those too stupid to know better and simply escalate the downward spiral of negative finances with interst rates of 2000%
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On the grounds that they prey on the desperate and only make things worse.
If you have no money taking a loan which loads £100 interest in a month only makes things worse, then it rolls over to the next month but topped up by a further loan....soon the loan is for thousands (mostly interest) and increasing massively day on day.
Whilst they may be up front on what they are doing a lot of the people who use them are too stupid to understand the implications of a 2000% interest rate.
There is ALWAYS an alternative way of getting money from hardship grants to charities who help out or friends and family. No one should ever use these legalised loan-sharks.
If you have no money taking a loan which loads £100 interest in a month only makes things worse, then it rolls over to the next month but topped up by a further loan....soon the loan is for thousands (mostly interest) and increasing massively day on day.
Whilst they may be up front on what they are doing a lot of the people who use them are too stupid to understand the implications of a 2000% interest rate.
There is ALWAYS an alternative way of getting money from hardship grants to charities who help out or friends and family. No one should ever use these legalised loan-sharks.
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B
businessfunding
There are a lot of big assumptions in there SMO about the circumstances and intellect of 'typical' borrowers.
Having had dealings with one of the smaller providers I would state categorically that the majority of their borrowers didn't match your stereotype in fact I was quite shocked by the employment status of many.
It is widely acknowledged that APRs in this sector are a complete red herring and that payday loans often work out cheaper than overdrafts or other borrowing tools
It is also recognised that the problem area is roll-overs or multiple loans (ie where payday loans become core borrowing) and moves are afoot to regulate this.
Having had dealings with one of the smaller providers I would state categorically that the majority of their borrowers didn't match your stereotype in fact I was quite shocked by the employment status of many.
It is widely acknowledged that APRs in this sector are a complete red herring and that payday loans often work out cheaper than overdrafts or other borrowing tools
It is also recognised that the problem area is roll-overs or multiple loans (ie where payday loans become core borrowing) and moves are afoot to regulate this.
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D
David A
Your biggest hurdle is not competing with the big boys, but getting up up and running in the first place.
In times past (and I was in this sector) a cheque supported with a cheque guarantee card would be the means of repayment. Once cheque guarantee cards were withdrawn, Continuous Payment Authority was the only remaining option, and this is what is used nowadays.
Within the last year I know of two small players who have been given the requisite 60 days notice from their bank to close their account. They have not found any other bank willing to provide facilities, so they have had to close this side of their business. Apparently, banks regard this sector as 'tarnished' and as they have had such bad press on other matters (and justly in my view) they do not wish to be associated with this type of business.
Thus you will need to find a bank that will provide you with the means to operate payday loans. My thoughts are that you will find this practically impossible.
In times past (and I was in this sector) a cheque supported with a cheque guarantee card would be the means of repayment. Once cheque guarantee cards were withdrawn, Continuous Payment Authority was the only remaining option, and this is what is used nowadays.
Within the last year I know of two small players who have been given the requisite 60 days notice from their bank to close their account. They have not found any other bank willing to provide facilities, so they have had to close this side of their business. Apparently, banks regard this sector as 'tarnished' and as they have had such bad press on other matters (and justly in my view) they do not wish to be associated with this type of business.
Thus you will need to find a bank that will provide you with the means to operate payday loans. My thoughts are that you will find this practically impossible.
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businessfunding
which is rather ironic since the payday loan sector is infinitely more open about charges than the banks are
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I missed a few posts there,
My thoughts on the interest charged and the service itself is that, yes they ARE more up front about it than the banks. I used Wonga once when i needed a few bob before payday. I think I borrowed about £150 and paid about £15 interest (it was about five years ago so im estimating) Bad deal considering it was only for 24 hours, however. It was my own fault for falling short - there were no secrets, no hidden extras, bogus charges or fine print to upset me. I borrowed, i paid back, the experience of not budgeting properly cost me £15. Cant get fairer than that in my opinion. They are not just lending you the money, they are doing you a favour, because you need a favour. If you are stupid enough to borrow money knowing full well you will struggle to pay it back then you probably deserve a financial ass whooping anyway.
My thoughts on the interest charged and the service itself is that, yes they ARE more up front about it than the banks. I used Wonga once when i needed a few bob before payday. I think I borrowed about £150 and paid about £15 interest (it was about five years ago so im estimating) Bad deal considering it was only for 24 hours, however. It was my own fault for falling short - there were no secrets, no hidden extras, bogus charges or fine print to upset me. I borrowed, i paid back, the experience of not budgeting properly cost me £15. Cant get fairer than that in my opinion. They are not just lending you the money, they are doing you a favour, because you need a favour. If you are stupid enough to borrow money knowing full well you will struggle to pay it back then you probably deserve a financial ass whooping anyway.
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businessfunding
The Op is evidently not too concerned as they have not been back, however we are all assuming that this an online business
There are of course other means to offer payday loans such as doorstep lending and various social networks
Much cheaper in systems and marketing with slightly increased physical and social risk...
There are of course other means to offer payday loans such as doorstep lending and various social networks
Much cheaper in systems and marketing with slightly increased physical and social risk...
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