I mean a person can open and close a checking account faster than lighting and you go into the credit bureau if you do not pay and the same thing happens with an unsecured personal loan. Why the risk? What is the difference? Bad credit is not so good credit.
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There are 8 Responses to “Why are lenders willing to give people with poor credit payday loans faster than a regular loan?”
#2 Gem - 21 September, 9:53 AM
They are willing to because they charge ridiculous rates of interest.
and if the person defaults (doesn’t pay) they end up getting 10 or more times the money loaned back in a court settlement.
Stay away from those places, bad, bad news.
#3 girlwhoknowsitstrue - 22 September, 9:57 AM
Because a regular loan is about 5 - 8%, so if you default the bank loses most of the principal. However, the payday loan fees are so high, it’s more like 100 - 400% - so even if some people default, the fees are so high that they make money - so they play the “numbers game” on volume - approve everyone, and at least get some money back.
I think it’s a shame that the poorest citizens refuse to use the banking industry and feed thoat payday loan sharks - $20 to get $100 a week early - do you know what that is on an annualized rate? Usury -
#4 sdn90036 - 24 September, 5:44 AM
It’s is a very profitable business. The rate of interest that they charge should be against the law, but it isn’t.
Good luck.
#5 Gatsby216 - 24 September, 6:52 PM
With the check, the lender has at least some “collateral”.
Some individuals are not so eager to close a checking account.
1. They may not be able to open up another checking account that easy.
2. A lot of companies do not like to use paper checks, or they mail them from some other city. So it takes 3-5 days to get to the worker, then they have to get the check then get to the bank.
3. The default rate on payday loans is very high. And when that happens the account will be sent to a collection agency and then show up on the borrowers credit report. Same as a regular loan.
Also because of usury laws conventional banks and lenders could not approve this segment of high risk borrowers. By not having to call the weekly fees interest they can charge effective rates of 200%-400% per year.
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#6 Jacob A - 27 September, 6:00 PM
Ey sup Gabrielle
Im not exactly sure what you looking for…
But I found this site below and from the looks of it I think it would be a lot of help…
anyways, gud luck Gabrielle
#7 Jeff - 28 September, 1:59 AM
Because the obscene fees and interest they get from the ones who pay is more than enough to cover the costs of writing off the loans from the ones who don’t pay.
#8 Amber B - 30 September, 5:04 AM
The fees they charge are equivalent to a sky high interest rate. They are willing to take the risk that some will not pay because apparently there are plenty who do.
I’ve bookmarked this site to go back to…
All the best to you.
Because the obscene interest rate they collect from those who pay the loan back more than covers the ones who don’t.