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Can the Pay Day Loan Be Reinvented? There has been some speculation that payday…

Can the Pay Day Loan Be Reinvented? There has been some speculation that payday…

There is some conjecture that payday lending is defined to really have a big 12 months. And with justification.

The sole focus of their business model as mentioned in American Banker’s “8 Nonbanks to Watch in 2013,” several tech startups have made short-term credit. The slideshow mentions ThinkFinance, a web business that makes use of data collected via social media to drive down the cost of a short-term loan, and Wonga, a short-term loan provider located in the U.K. that is considering a visit for this side regarding the pond. Others are focusing on the area. ZestFinance, a Hollywood, Calif., business, is marketing an underwriting model to loan providers that it claims features a standard rate 50% much better than industry average. BillFloat, a san francisco bay area startup that offers a lending that is short-term, just announced it had raised $21 million to grow its loan offerings. Additionally located in san francisco bay area, LendUp advertises clear loans to pick borrowers.

While these companies’ business models differ, their ultimate goal appears to be the exact same: use some kind of big information to drive down the fee of a loan therefore underserved customers can get credit without paying an excessive cost. ( According to the Consumer Federation of America, pay day loans typically cost 400% for an annual percentage rate basis or maybe more, with finance charges which range from $15 to $30 on a $100 loan.) Cost transparency is usually part of the pitch also there is undoubtedly a demand for this sort of product. Continue reading Can the Pay Day Loan Be Reinvented? There has been some speculation that payday…