This is What You're Not Allowed to Read About Short-Term Loans
One of the biggest causes for big banks hating relatively small-sized short-term loan businesses is mostly because the smaller companies are eating away at their ability to have a monopoly on the market -- credit cards.
Of course, one of the obvious reasons for big financial institutions to take on short-term lenders is that of competition. If people get a short-term loan then they won't get a bigger long-term loan at the big banks -- competition.
There is some legislation afoot in many states, and countrywide, to limit the APR interest rates allowed by short term lenders to about 36%. Currently, they charge from around 456% to as much as thousands of percent in interest, making their short term loans very lucrative.
Of course, if the financial institutions cap the APR of short-term loans, then they'll be able to wipe out the little guy who wouldn't make ANY money per loan. This would force people into the net of the big financial institutions. Sucks, right?
One of the main reason these big companies don't try to market short-term loans is because they spend to much to work on a loan to make it profitable. Making $50 per loan isn't enough to cover the costs of the paperwork for the big guys.
The interesting fact, however, is that a few large financial institutions fund most of the small short term lenders. They get a profit on the side, so to speak, because they are enabling the short term lenders to stay in business by lending them millions of dollars for payday loans.
Basically, no matter what happens, the big financial companies will be profiting overall, which might be another reason they hate these small loan companies -- they need their business, which puts them into a bind.
People sometimes need to get money fast. If they can't get short-term loans, they might have to use credit cards or long-term loans... especially if short-term loans are outlawed. That's the whole point, in the end.
They can go back to pawning items, althouigh there is some legislation of a similar limiting nature going on there also.
Of course, some people might need short-term loans that the big banks will be forced to offer them -- but that probably won't occur.
The big banks outrageously despise the small short-term loan lenders because they are succeeding in markets where the big banks can't expand. There are simply tons of small financial companies.
Of course, one of the obvious reasons for big financial institutions to take on short-term lenders is that of competition. If people get a short-term loan then they won't get a bigger long-term loan at the big banks -- competition.
There is some legislation afoot in many states, and countrywide, to limit the APR interest rates allowed by short term lenders to about 36%. Currently, they charge from around 456% to as much as thousands of percent in interest, making their short term loans very lucrative.
Of course, if the financial institutions cap the APR of short-term loans, then they'll be able to wipe out the little guy who wouldn't make ANY money per loan. This would force people into the net of the big financial institutions. Sucks, right?
One of the main reason these big companies don't try to market short-term loans is because they spend to much to work on a loan to make it profitable. Making $50 per loan isn't enough to cover the costs of the paperwork for the big guys.
The interesting fact, however, is that a few large financial institutions fund most of the small short term lenders. They get a profit on the side, so to speak, because they are enabling the short term lenders to stay in business by lending them millions of dollars for payday loans.
Basically, no matter what happens, the big financial companies will be profiting overall, which might be another reason they hate these small loan companies -- they need their business, which puts them into a bind.
People sometimes need to get money fast. If they can't get short-term loans, they might have to use credit cards or long-term loans... especially if short-term loans are outlawed. That's the whole point, in the end.
They can go back to pawning items, althouigh there is some legislation of a similar limiting nature going on there also.
Of course, some people might need short-term loans that the big banks will be forced to offer them -- but that probably won't occur.
The big banks outrageously despise the small short-term loan lenders because they are succeeding in markets where the big banks can't expand. There are simply tons of small financial companies.
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