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.
The big finance industry has their APR rates limited, and they do not offer the small loans like payday loan companies offer because it would not be profitable for them. At the same time, they look at the blossoming payday loan business and see that they are making huge profits, while serving millions of people daily.
Of course there are a ton of legislation pieces around the nation and even around the world that restrict APR rates. Long-term rates are much much less than short-term rates, much in the way renting a hotel room is expensive over a year compared to just renting a place.
Then again, most institutions know if they can cap interest rates to about a hundreth of what they are, they can wipe out short term loan lenders, meaning they can take over the entire short-term loan industry with long-term loans and credit cards.
Of course, big companies have to make more than fifty bucks per loan -- the smaller guys don't. It's just a question of them squashing small business competition.
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.
It seems like no matter what happens, big finance will profit from comsumers needing short term loans. That could be another reason why big finance hates small payday loan companies, in that they need the business, and must deal with the payday loan companies.
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.
Or, they can demand that the big financial institutions provide the small loan services, which will not be profitable.
Big finance hates watching small payday loan companies grow and thrive. In some places, there are more payday loan stores than McDonalds and Starbucks.
The big finance industry has their APR rates limited, and they do not offer the small loans like payday loan companies offer because it would not be profitable for them. At the same time, they look at the blossoming payday loan business and see that they are making huge profits, while serving millions of people daily.
Of course there are a ton of legislation pieces around the nation and even around the world that restrict APR rates. Long-term rates are much much less than short-term rates, much in the way renting a hotel room is expensive over a year compared to just renting a place.
Then again, most institutions know if they can cap interest rates to about a hundreth of what they are, they can wipe out short term loan lenders, meaning they can take over the entire short-term loan industry with long-term loans and credit cards.
Of course, big companies have to make more than fifty bucks per loan -- the smaller guys don't. It's just a question of them squashing small business competition.
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.
It seems like no matter what happens, big finance will profit from comsumers needing short term loans. That could be another reason why big finance hates small payday loan companies, in that they need the business, and must deal with the payday loan companies.
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.
Or, they can demand that the big financial institutions provide the small loan services, which will not be profitable.
Big finance hates watching small payday loan companies grow and thrive. In some places, there are more payday loan stores than McDonalds and Starbucks.
About the Author:
Learn more about short term loans. Don't forget, you might make money fast supposing that you want quick cash..
No comments:
Post a Comment