Just wondering how profitable the companies that loan people money are. Is it worth trying to start your own lending business?
In: 0
It is extremely profitable both on the legal and illegal sides ,they are charging you every day you are using the money and if you don’t pay they get what you bought with their money and resell it for more money.
Banks and non-bank lenders in general can be very profitable. It is a very tough business to break into however as it requires a tremendous amount of upfront capital.
It can be hugely profitable, but there have been cases where lenders become overexposed to borrowers who can’t/won’t repay the money. In those cases, they sometimes plead for a bailout (yet another case of public risk, private profit), other times, they’ve simply folded.
Where they manage risk well, they can do well, but well managed risk is not “growth”, so there is always pressure to offer loans to people/companies that have no business borrowing money. That’s where they become predatory and themselves run the risk of a changing market killing them.
It takes a lot of capital, it’s hard to start without some deep pockets.
It’s a return on investment thing, like if you look up some public companies like that you’ll see things like $100 billion in Assets, $1 Billion in Revenue and $200 million in profit.
And its all about getting people you need to pay usually on commission to get loans for you.
How do you feel about loan sharking?
See those tall skyscrapers in every major city? Yeah, those were built with the profits of generous amounts of middle and lower class people’s money.
The answer to your question: a shit ton
Latest Answers