Superloans

I was behind a car a few days ago that was advertising Superloans and telling people they can help you make ends meet between pay days.

I commented to the driver that I bet you they charge an outrageous interest rate, so I checked when I got home. I was expecting an annualised rate of 100% or so.

On their website, there is no mention on the home page of their current interest rates. No mention under their super pay advance FAQs also.

Finally on their disclosure page you fund out their interest rate is 16%.

Not per annum though. That is per fortnight. That works out to 416% per annum.

I feel sorry for people so desperate that they allow themselves to be exploited by these loan sharks. Yes these are unsecured loans, but hell even if you had a default rate of 20%, then an annualised rate of say 50% would be a pretty reasonable 20% return on capital.

It would seem to me there is a market opportunity here for a company to undercut the rip off merchants. Maybe there are barriers to entry that make this difficult.