> I guess I should start a payday loans company marketed in such a way that using it doesn't offend the class sensibilities and self-image of well-off millennials and say I'm doing something "new".
While I suppose it was off topic from the thread I commented in, I did believe it was relevant to the comment I commented on (in my efforts to keep my comments of a high quality).
Thanks for the mod work! It's a thankless job but appreciated.
What's wrong with granting loans to people who have bad credit? What are they supposed to do if there's a shortfall or a car breaks down, pawn a wedding ring?
I used to work for LendUp. They're the most caring and altruistic people I've ever met. I mean that literally.
LendUp uses machine learning & data science to decision people with more granularity than a credit score, and can therefore approve much deeper than banks or credit card companies ever would. On top of that, as LendUp learns you're a reliable borrower, it will lower your interest rate as far as it can for you, give you more favorable terms, and even extend a credit card for those that qualify.
LendUp helps people improve their credit when almost no one else will lend to them, and has been shown in independent studies to both improve credit scores and decrease the costs of borrowing for subprime borrowers. These are folks for whom the only other option is payday loans or pawn shops if there's a shortfall, and LendUp uses tech to give them much better options.
It's a noble mission, and one I'm damn proud to have been a part of.
What's wrong is the absurd fees they charge. The only difference I can see between them and payday lenders is the shabby facade of credibility they think they have by being a "tech" company. Nobody who has to scrabble for $250 for an emergency is in a position to drop a 25% vig on top of it in repayment.
But if you lend to high-risk creditors, you have to have non-repayment built into the rate. As of the last time I saw an article on it, the rate of default for payday loans was something like 50%. High interest rates are there to absorb the risk.
Why would you stop reading? Credit scores are good, but not everyone (in the world) has them... cash economies, etc.
There was some startup that micro-loaned in poorer countries based on a person's cell phone info (ie, how many contacts, who they called the most, etc, etc).
Yeah, it's kind of gross really. These guys prey on the inability of certain income-classes to get credit, obtain loans, etc. Rent-a-Center is the same way :(