Quote:
Originally Posted by Barry-xlovecam
Payday Loans are not loans at an interest rate -- they "factor" a check: (Trade in the buying and selling of personal property (your bank draft [check]).
Simpler example: A pawnshop of checks.
Pawnshops are regulated. However, subject to individual state laws (in the USA) an individual can buy property and sell it ;)
This is a $5 trillion market (*At the end of 2004, the US repo market reached US$5 trillion)-- same idea really but legitimized by SEC regulations and license -- securities are personal property. (In essence; the same as your auto or diamond ring.)
The 1% don't play for nickels and dimes ... |
There have been studies done by every province in canada on the real cost of offering payday loans.
Every independant agency concluded that the real cost, advertising cost excluded, lays between 22 and 27% of the total ammount borrowed.
That mean just to break even on a 500$ loan you have to charge back 125$ in fees/interest.
The rate of default is high.