I don't get it. So who are their customers? Why not just load up...

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Christos12

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07/06/18

13:28

Post #: 33562999
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Originally posted by ValueTrader82 ↑

So your confusion, is exactly why ASIC and the Small Business Ombudsman have a problem with transparency, in the case of Prospa... and others... As its not very clear....And if you can't work it out, you'd imagine 95% of small business owners/retailers can't either....

I'll explain to you where you are going wrong, maths-wise.

If you take out a $26k loan from Prospa, you commence making repayments to them, of equal size from day 1.... on the full amount. So if they apply a Factor rate of 20-30%, then you have to repay $26k+ 20-30% of this, on a daily or weekly repayment plan over the duration of the loan... This means, you are paying the supposed 20% interest rate of the full principal amount, even when you owe far less ( think 6 months in, when you've paid half of it down, but are still paying full equal payments).

A crude way to get a better idea of what the real APR is by finding the average exposure over the course of the loan... say the midpoint - so take lets take the numbers you provided - 50% x ($26k+ 7.2k of interest) = $16.6k ... then apply the interest component as a % of that... so $7,200/$16,600 = circa 43% interest.

@Warnie @Christos12 thoughts?

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I don't get it. So who are their customers? Why not just load up the credit card or get an unsecured loan from the bank? The only advantage to use Prospa to all other sources of credit seems to be access. This is very worrying.

PGL Price at posting: $3.64 Sentiment: None Disclosure: Not Held
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I don't get it. So who are their customers? Why not just load up...

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