Why do Big Banks Hate Short-Term Loan Companies?
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.
There is some legislation afoot in many states, and countrywide, to limit the APR interest rates allowed by short term lenders to about 36%. Currently, they charge from around 456% to as much as thousands of percent in interest, making their short term loans very lucrative.
Of course, if the financial institutions cap the APR of short-term loans, then they’ll be able to wipe out the little guy who wouldn’t make ANY money per loan. This would force people into the net of the big financial institutions. Sucks, right?
And, the reason they do not currently make these payday style loans is because, with their limited interest fees, the work would not be profitable.
Then again, some people suggest that the big lenders actually are behind the smaller lenders, lending money in lump sums rather than to specific people who want a loan, meaning they are making money on the side.
Basically, no matter what happens, the big financial companies will be profiting overall, which might be another reason they hate these small loan companies — they need their business, which puts them into a bind.
If the big companies wipe out short-term loan lenders, the consumers are going to put their money in the coffers of the big financial institutions. And that’s what it’s about in the end.
They might be able to try out a way to make money online or sell products, but there will soon be legislation outlawing that as well. This is really going to affect lower-class Americans.
Then again, there might be such an outrageous demand for short-term loans that the big banks might actually end up offering them. The chances of this happening are slim.
The big banks outrageously despise the small short-term loan lenders because they are succeeding in markets where the big banks can’t expand. There are simply tons of small financial companies.
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