The major drawback about making payday loans is that because the clients are already strapped for cash to meet their obligations, they don’t have much of a safety net or the income to get them out of their situation, so they came to the payday loan lender as a last resort. Also the client will typically have little to no useful assets and proceeding with a lawsuit is a waste of time and money.
The upside to the payday loan business is that the high interest can be very profitable as long as your losses are kept at a minimum. Also many of these clients who have a small safety net and low incomes will get into a cycle of needing the payday loan services which when you know they are going to pay their bill, are essentially a goldmine.
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