Filling the Gap Between 36% and 99%

There is NOT a lot of competition out there for unsecured loans charging between 36% and 99%.  Increase the rate another 400% and lenders are tripping over each other to get to these borrowers.  The reason is that the triple digit rates allow the lender to take the losses that are typical of the payday loan industry and be profitable.

Here comes Avant Credit.  They offer larger loan amounts (starting at $1,000) and cap their rates at 99%.  The rate can be as low as 35%.

So is Avant crazy?  Or brilliant?  I think they’re brilliant and Avant just raised another $20 million from some reputable VCs.

I’m not sure who they are targeting.  Are they looking for really good payday borrowers or really sketchy credit card borrowers?

According to Demos, over the past three years, 39 percent of households have experienced tighter credit, such as having cards canceled, credit limits reduced, or being denied a card when applying.  This is based on a survey of about 1,000 people, so we really don’t know how many low and middle class people are out there.  If it’s 40% of 100 million, then that’s a lot of people.


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