Do you think a fast payday loan direct lender service makes big money from small short-term loans? The industry is often pointed to as a booming business that feeds off the dangers of the less fortunate. Direct lenders cannot deny all of the allegations altogether, as they fully understand how predatory lenders’ practices have made a name for the industry. The good news for borrowers is that there are plenty of secure payday loan lenders who aren’t looking to eat your income for dinner.
With the postal service losing revenue from mail charges, are they looking to move into the payday loan business in hopes of making up the difference? There may be quite a few lenders watching how your story will unfold. With experience in short-term loans, responsible lenders can tell you that the industry as a whole isn’t making big profits. How much money can you make with a $300 loan? In the world of finance, a finance charge of $75 is a pittance.
Like any other business, payday loan companies have overheads. These small fees should add up to cover construction costs, employee wages, benefits, taxes, and some leftovers to cover losses. Just as there are borrowers who take their loan obligations seriously and pay their debt, there are others who do not. There is a bad debt that must be written off from those borrowers who did not repay the loan. It is unfortunate to think that the behavior of some customers would keep interest costs high for those responsible. Direct payday loan lender offers small loans with high interest rates. Credit card companies have also been forced to raise limits for riskier customers. Someone has to pay for the loss of a company.
What does it all come down to? USPS may not get the revenue you expected. On the other hand, with quick cash advances and alternative options for those without bank accounts, the postal service can at least make some profit. They will learn that these clients can take 3-5 months to earn, so they will need to be patient. Fees are only converted to profit once the loan has also been collected. Getting paid for an interest charge cannot be considered a profit until it is measured above the loan amount. A borrower who takes out a $375 loan and pays $48 in fees over the next five months without paying back the principal balance will actually show up as a loss on the books. The fees do not come close to the amount borrowed. In the meantime, the postal service will have business responsibilities to deal with. Where is the high income in that?
The USPS will have to lend to numerous borrowers before they see any signs of profit. Where will they get their money to lend it? Do they have profits to risk with clients or will they have to borrow from the government or the private sector? If the USPS borrows money, you will have interest payments in addition to the costs of the loan. It further reduces income.
Yes, it would be nice to have additional options for those who are unable to acquire a bank account for whatever reason. It would be nice to have a place to cash a paycheck without huge check cashing fees. The post office won’t do it for free, but it will cost less. Smaller finance charges will attract new customers. The postal service may find a new niche in the payday loan and check cashing industry. Time will tell if the service charges will support the overhead. How many new headaches will they want to deal with once they’re introduced to borrowers who don’t consider making payments an obligation to borrow money? It would be nice to have an additional responsible direct lender to add to the group to help erase the reputation problems of the direct payday loan industry.