3 Responses to “I want to Loan out Payday loans out of my home on the net and make a 25% profit?”

1. donmustard@sbcglobal.net says:

   January 19, 2012 at 7:21 pm

   is it legal in your state is your first question? the legal details can be worked out how to protect yourself…goodluck…

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2. David M says:

   January 19, 2012 at 7:51 pm

   Do you read the questions on this site about people being harassed by bill collectors because they won’t pay their bills, loans, credit cards, etc. And do you read about them asking how to file for bankruptcy? They will be your customers. And now we have people in Congress and Democratic presidential candidates talking about making it easier for “unfortunate” people (your customers) to declare bankruptcy. You think it’s easy making money in this space? Talk to lenders in the sub-prime arena. Good luck!

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3. Simon O says:

   January 19, 2012 at 8:44 pm

   The answer is you would probably have to become incorporated/limited liability (depending on where you’re from).

   You would also need a solicitor/lawyer to draft up legal contracts. In short, you’d have to act just like everyother legitmate firm on the internet. You would need to take plenty of personal details and confirm those details. Their address for instance; by sending them a letter with a code that they have to give to you. You can’t take chances. Theres a reason payday loans charge 100′s% APR. And its because the RISK they take on.

   Key point – You CANNOT truely ‘cover your ass’ in this business. I repeat; the interest is so high, because the people that have no choice but to take out your form of loan, are highly unlikely to pay.

   Another Key point – You CANNOT put all your eggs in one basket. The way payday firms work is, they charge 25% to 10 or so people, and they know they won’t get their money from 1 or two. But because they have lent out to many at this high rate; overal they will get a ‘sensible’ return of say 10%. What does this mean for you? Well, that you cannot afford to use personal money to loan to just a couple of people. Even Payday appreciate how many of their debts don’t get paid. And that isn’t because their bailiffs or lawyers aren’t good enough; its because the person seeks bankruptcy and payday do not see any of their money.

   So Overall I advise to

   - Be aware the risks these firms take on, and that they only make their money by having a large number of clients.
   -Be aware that if you only lend to a couple of people, you are not diversifying your risks as much as the big firms, and this extra, needless bit of ‘undiversified’ risk will not be rewarded.
   -If you have the capital, then I suggest you see an Accountant or lawyer and talk through what claim on their money you will have if you remain as an individual, or if you become a business.

   Good luck in your venture

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