Eli5 ‘How do personal loan companies make money if you pay everything you loaned back,before the first installment date (and no early repayment fee either)?’

Question

Eli5 ‘How do personal loan companies make money if you pay everything you loaned back,before the first installment date (and no early repayment fee either)?’

In: 6

Answer 1

If a company does operate that way, the catch is they expect very few people to pay it all back on time.

Payday loan companies are notorious for high interest rates and preying on folks that are terrible with their finances to begin with so they rake in the money while taking advantage of people.

My boss used to work for one and the unofficial motto was “forever in debt”