These lending companies seem to be literally popping up on a day to day basis, these companies cater to people who have bad credit scores, who can't get a loan from a regular bank, have a bad history of paying back lenders and so on.... so here comes these new companies to lend a hand and it can be all yours for just a small borrowing fee of 26-36% APR haha. They say they offer a fair price thats transparent with no surprises or weird fees. Wonder how their algorithms look at potential clients to justify if they are willing to accept them and know they are going to get their money back after lending it out at 26-36% APR....And is it me or does every Ex google employee who starts a company gets tens and hundreds of millions of dollars in capital right from the start....I mean the guy in the picture is standing in front of white board with a bunch of equations on it. Are those the formulas to find out the % of the people who are actually going to pay back those loans at an APR of 26-36%?? Ex-Google CIO just raised $150 million to power a service launched 3 months ago By Eugene Kim15 hours ago View photo . (Zest Finance) ZestFinance CEO Douglas Merrill. It was only about three months ago when ZestFinance, the online lending startup founded by ex-Google CIO Douglas Merrill, launched a new loan service called Basix. Basix is a lending service aimed at the "near prime" market, or people with credit scores just below levels that would qualify them for regular bank loans. Merrill says millions of near-prime Americans had been underserved by banks, especially since the 2008 financial crisis, and Basix makes it easier for them to find affordable loans. In the three months since its launch, Basix seems to have grown pretty fast — so much so that it just sealed a $150 million debt-financing deal with Fortress Investment Group, one of the world's largest investment firms, with roughly $70 billion in assets. The new funding will be used for the consumer loans that Basix provides. "It's a public validation that Fortress believes in our team and approach," Merrill told Business Insider. "It underscores their belief in our technology and that our technology will be a key element to transform this space going forward." Thousands of signals Basix is the newest product from ZestFinance, and it's built on top of ZestFinance's underwriting technology, which looks at tens of thousands of "signals," such as personal spending habits and social-media reputation. Merrill says it's a much more effective underwriting tool than the traditional credit-score method, which takes into account fewer than 20 variables. Based on the determined user score, Basix offers loans of $3,000 to $5,000 over three years at a fixed APR of 26% to 36%. "The essence of underwriting is trying to find the ability to repay and the willingness to repay, and that's really hard to do in the FICO-based traditional underwriting," Merrill added. "Our approach is to be able to capture a really rich view of all the applicants. Can you pay us back, and if you can, will you pay us back? And that's what we're really good at identifying." Merrill didn't disclose any financials or growth numbers except to say Basix had made "thousands" of loans, worth "millions of dollars." Instead, Merrill said the fact people were coming back to his platform was proof of the service's effectiveness. "If we offered a really bad credit deal, why would we have customers and why would they borrow from us?" he said. "We think we offer a fair price, and more importantly, we're offering a transparent deal. There are no surprises, no weird fees." ZestFinance was founded in 2009 and has raised over $250 million in funding. In addition to Basix, ZestFinance has an emergency loan service called ZestCash targeting subprime borrowers. Merrill says the underwriting technology, built by a group of former Google engineers, leveraging Google's machine-learning and data-science technology, is essentially what the new investors are counting on. "Fortress was impressed with Basix and our model even before we raised our first loan," Merrill said. "We demonstrated it's going to work quite well, and Fortress' capital will allow us to serve this market more effectively and more quickly."
It's all perfectly legal - as long as you don't call it a loan...check out these guys. 35% interest is leaving a lot on the table. http://www.bloomberg.com/news/features/2015-10-06/how-two-guys-lost-god-and-found-40-million
There should be a free market in loans if you ask me.... It's per a person's choice if they want those terms...
re: "During an interview at a bar a few months earlier, I’d asked Zeines about his conscience. He said he didn’t see a problem with what he was doing. Pearl’s cash advances were expensive, he said, but it wasn’t like its customers had a lot of alternatives." Exactly..and he filled a need in the marketplace. Smart guy.
Not really. His first goal is to determine which FACTORS are meaningful when determining the probability of getting paid back. Notice the RENT vs. OWN on the board....that's huge.