hw finace #4 - Homework#4 FIN 336 1 A The payday lending industry has been on the rise with the simultaneous decline of the bank lending industry ever

hw finace #4 - Homework#4 FIN 336 1 A The payday lending...

This preview shows page 1 - 2 out of 2 pages.

Homework #4 FIN 336 1. A) The payday lending industry has been on the rise with the simultaneous decline of the bank lending industry ever since the recession. They are able to charge astounding interest rates of more than 500% annually. They claim that they have to do this because of the fact that they give out unsecured loans that are often times not paid back. Some states have retaliated against these lenders by creating laws to keep them out. This has led to a 13% decline in total payday loan locations from 2007. At the same time, the banking credit and loan industry has fallen 51% from 2007 due to a sluggish economy, bank failures, and tighter standards. This is forcing many people to go to payday loan businesses for loans because a bank will not accept their application. Often times, applicants at payday loan offices will be granted a loan anywhere up to $1000 within 10 minutes. Another factor that is contributing to the spread of these businesses is the low start-up costs. A typical bank needs approximately $1 million to $1.5 million to open
Image of page 1
Image of page 2

You've reached the end of your free preview.

Want to read both pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes