Does anyone on here know anything about the Payday/Title Loan

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>>1609390
By the way, I genuinely would not want to try to make the most money possible from this type of business. Obviously, I would like to try to make a good living; but a really good living to me could be making like $50,000-$60,000 per year.

Part of the reason I have thought about this lower-interest-rate Payday Loan business is because I would like to stick it to the greedy payday loan stores who take advantage of desperate people and charge outrageous interest rates, while (I would have to assume are) making outrageous profits from people who are struggling.

And another part of the reason would be to actually try to help people who are struggling and in need of help, by offering them reasonably-attainable loans to help them get through tough times, while not taking advantage of them and trying to make the most money possible.

If anyone has any information about this type of business, or even any advice or suggestions, I would really appreciate some feedback.

Thanks in advance to anyone who replies!

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>>1609390
>>1609413
Did I post this on the wrong board? Or is it just that no one on here gives a shit about this question?

I will try to give you some answers, I'm not a business man but still. Maybe it will help.
1st of all, I think that this type of business is mostly connected to some bad guys, wouldn't that mean getting beaten the shit out of you if you try to destroy their business?

2nd, do you think it is worth the risk of not getting paid back the money you loan to people for some small income?

3rd, where will you get the money to lend to people? If they have to pay huge interest, only the most desperate people will borrow money, but if you offer much lower interest rate, more people will try to borrow from you, meaning that you will need a lot of cash, while not earning too much. Or you could start declining those loans, but wouldn't that destroy the point of this type of business?

Even if there is no minimal ammount you can charge (I suppose it should be the other way around, a maximal ammount you can charge) it is still a very risky business that could potentially lead to your bankruptcy if some people refuse to pay back, and I suppose this is the main reason for such high interest rate.

>>1609538
Thanks for taking the time to reply.

1.) To be honest with you, I hadn't even thought about the possibility of the payday loan business being connected to bad guys (i.e. organized crime, which is what I'm assuming you were referring to). I don't know if that's realistic; but if it is even realistic possibility, it's certainly something that I would be concerned about. I wouldn't want to have to worry about the possibility of having to deal with potentially-dangerous shit like that.

2.) As for getting paid back, yes, that's definitely a concern; which, I'm assuming, is why Arizona now requires a borrower to give their vehicle title, or vehicle registration, as collateral in order to get a "payday" loan like this. Also, loans like this are often limited to $500, sometimes, maybe $1,000, which isn't exactly small change, but would seem to be an amount that could be taken as a loss and still continue to stay in business, as long as it isn't happening frequently. However, I recognize what you are alluding to.

3.) This isn't something that I am thinking about trying to do right now; but it is something that I've thought about many times over the years. So I just wanted to ask about it and see if it's even something worth contemplating as a realistic opportunity some time down the road.

And with regards to people not paying back loans and possibly causing bankruptcy, I would certainly need to try to limit the total amount in collective loans that could be lent out for a while. I'm sure that, as a business owner, I could determine the maximum amount for a loan that I offered; which I could try to limit to being $500 - at least, until the store has been open for a few months and I'd have an idea of how successful the business is looking to be.

Thanks again for replying. If you have any other thoughts on this, please feel free to reply again!

People with good credit don't use payday loans since they can get better deals at their bank.
The payday loan business therefore is defined by taking on people with bad credit scores. In fact, most payday lenders don't even check your credit history (and advertise as much).

At this point it turns into a numbers game. If I lend your 100 bucks for a month and you have to repay me 120, I can afford 1 loan out of 6 defaulting, because the other 5 will have made me back the 100 buck loss.
In practise this problem is a lot harder than that. You have running expenses like rent and salaries. Then there are capital costs. Whoever put up the money could have invested it somewhere else and gotten interest (ie opportunity costs which you need to cover). And in the end you as the operator have to live and eat and therefore would like a little profit as well.

So sticking with our example above, the real value is probably close to 1 default in 12 loans you can stomach, ie double for simplicity's sake.

So you'd rely on 11 out of 12 people to properly repay their loan, even though by definition your customers have a horrible credit history. Your business is open to anyone it it's really hard to vet them, but only 1 in 12 can be: a fraudster, untrustworthy, straight-up out of money, terminated from their job, sick, etc. How could you guarantee that? Some of that isn't even up to your customers but just stuff that happens randomly. But if your risk of default is higher than 1 in 12, then rates must go up or you'll be making a loss.

If you want to lend 500 bucks, just do a calculation. If you "only" demand 20 bucks on top, you're putting your faith in ~50 perfect payments on every default. That's a lot of faith in shitty people who are very hard on money...

>>1609575
You're welcome, as long as it helps I'm happy :)

1. I don't know how it works in USA, but in my country this type of business is often connected to this type of people, mainly because only those people are able to take the money back in case something goes wrong (to some people broken bones have bigger impact than legal problems).

2. Once again, I don't know how it works in your country and I suppose that there shouldn't be too many people trying to scam you, but still, it is something that is very important and could potentially lead to huge financial problems, therefore that is one of the very first thing to check out before starting this business. I supose only people dealing with that will have exact knowledge about amount of scammers, but I doubt they will be willing to share this knowledge with others.
And if we think about taking something as a collateral, we are talking about small sums of lets say 500 - 1000$. I suppose most of the cars are worth much more than that and the only thing that could be simillar in value to this amount of cash should be computers / tvs or something like that. So thinking about worst case scenario, you need to have a way to get that item back from the borrower, and then have a way to succesfully sell it.

3. Once again, this type of business requires quite big initial investment, and it should be taken from money you can potentially loose without worrying too much. You also need to take into account things such as good customer relations. If you advertise yourself as a business giving loans of 500$ to all people, and you gain a lot of attention, it will be quite bad for your image if you stop giving the money out simply because you have no more left. That might lead to potential loss of customers and that is definitely not good for business.

Once again, this is just my opinion about this business, I don't really have too much knowledge about this matter and am only speaking about the way I see things.