Just wondering how profitable the companies that loan people money are. Is it worth trying to start your own lending business?
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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.
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