Comments on: Would this bill cause payday lending to become unprofitable & no longer exist? http://lendingproguide.com/would-this-bill-cause-payday-lending-to-become-unprofitable-no-longer-exist/ Free Consumer Lending Resource Tue, 22 May 2012 03:39:08 +0000 http://wordpress.org/?v=2.7 hourly 1 By: froggyj5 http://lendingproguide.com/would-this-bill-cause-payday-lending-to-become-unprofitable-no-longer-exist/comment-page-1/#comment-134 froggyj5 Sat, 13 Dec 2008 04:29:37 +0000 http://lendingproguide.com/would-this-bill-cause-payday-lending-to-become-unprofitable-no-longer-exist/180/#comment-134 It depends on what the going rate is now. The cap doesn't matter if it's above the going rate. For example, if payday loaners typically charge 25%, that would suggest that 25% is a profitable rate. So if the cap is at 28%, it shouldn't affect the availability. However, if the going rate is 35%, I would assume that the loaners would lose money at such a rate, and no longer provide loans. However, not being an expert on payday loaners, they could be colluding or doing something else unsavory, and their profits are larger than they would be in an equilibrium market. It depends on what the going rate is now. The cap doesn’t matter if it’s above the going rate. For example, if payday loaners typically charge 25%, that would suggest that 25% is a profitable rate. So if the cap is at 28%, it shouldn’t affect the availability. However, if the going rate is 35%, I would assume that the loaners would lose money at such a rate, and no longer provide loans.

However, not being an expert on payday loaners, they could be colluding or doing something else unsavory, and their profits are larger than they would be in an equilibrium market.

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