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alicecarroll t1_j2517n4 wrote

Please don’t forget that loan sharks are outfits that advertise on tv (in the U.K. amigo loans or similar) not just shady people / ‘the mob’. Payday loan companies are loan sharks.

APR’s can be hundreds or thousands of % of the principal meaning if you needed 200 to get you through three weeks you already owe triple + When it comes due. If you didn’t have 200 to start with you definitely don’t have the repayment.

They prey on the vulnerable. They’re disgusting.

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Minuted t1_j255ot9 wrote

What you're talking about is usually called predatory lending. Generally the term loan shark refers to people who operate outside of the law.

That's primarily why they're so dangerous, they're just like predatory lending companies but on top of that you have no legal recourse, nor does the loan shark have to obey any laws surrounding lending. Depending on what sort of loan shark they are they may even resort to intimidation and violence.

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EdgarsChainsaw t1_j254nlr wrote

Do they actually make excessive profits, and if so what's to stop other people from entering the market and undercutting them? My guess is that the default rate on payday loans is so high that they actually do have to charge such interest rates to cover the risk from an actuarial perspective.

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