August 29, 2007

MIXED REVIEWS FOR nonprofit payday loans. Turns out that even the nonprofits charge very high rates. “Of the $9.90 that GoodMoney charges per $100 borrowed, nearly half goes to writing off bad loans, Mr. Eiden said, and the rest to database service and administrative costs.” (Via Christine Hurt, who has some thoughts of her own: “To charge a lower rate, GoodMoney would either have to lose money or fundraise to cover shortfalls or in the alternative, offer their services only to those with better credit, which might not serve their mission. I think critics of payday loans have all along suspected that the 500-plus% APR was compensating for more than the inherent risk of the loans, but I’m not sure that I realized that 250% was necessary.”).

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