Q: not a question; just information........and a request
i get it, we're all in it to make money yet this company would make a loan shark blush
check out their site "creditfresh"
borrow $1,500 and pay back monthly (from website)
month 1 - $184 'billing cycle charge' and $30 (2% of principal) for a total of $214
month 2 - $184 fee + $29.40 principal
month 3 - $184 fee + $28.81
etc etc etc
it 'appears' that if you let this run the full 48/50 months you would have paid $5,070 in fees
i would be curious if another member can run the numbers and confirm or explain where i went wrong
thanks
i get it, we're all in it to make money yet this company would make a loan shark blush
check out their site "creditfresh"
borrow $1,500 and pay back monthly (from website)
month 1 - $184 'billing cycle charge' and $30 (2% of principal) for a total of $214
month 2 - $184 fee + $29.40 principal
month 3 - $184 fee + $28.81
etc etc etc
it 'appears' that if you let this run the full 48/50 months you would have paid $5,070 in fees
i would be curious if another member can run the numbers and confirm or explain where i went wrong
thanks
5i Research Answer:
The industry is regulated, and in the last year in Canada the maximum interest rate was capped. The industry is known for higher fees. While these rates of course look egregious, charge-off fees can be very high. Loss provisions can be as high as 50% of revenue and actual write-offs can be 14% at times. It is an underserved, high risk client that uses these services. Some of the clients really do not have a lot of options other than 'Larry the loan shark' which of course is worse. It is a legal, regulated business.