41–50 of 73 posts
This interest free loan makes it VERY susceptible to fraud or abuse. Lets consider for example, a technology contractor, making $120,000 a year from various contracting jobs. The contractor could sign up for Even, and then retire, collecting a $2500 "paycheck boost" interest free. I think this idea has a lot of value, but their current business model can't be profitable.
Earlier quoted context omitted.
Those links were posted by different people. You might want to check ColinWrights submission history - they submit many interesting articles. They're not shilling or astroturfing for this company and your assumption is a bit rude because it's so easy to check. About the dupe: This submission has a clean url, the earlier submission has a bunch of cruft which is probably why the dupe filter didn't spot it. http://www.n…
The article author obviously is astro-turfing for the company and if people want to link infomercials passing for journalism I can have an opinion on that. (I agree that I did not phrase my first comment well and it makes it sound like I implied ColinWright's involvement specifically, I've fixed that). That doesn't change the fact that it's a duplicate from within 12* hours and should get removed.
Or they think it's fascinating and want to share. I'm saying it's not "obviously" anything, to me.
tl;dr App called "even" allows people with incredibly variable income (case study is on a massage therapist, lots of money one week, little the next) to even out their income. They evaluate their income history, then offer a stabilized value, say $380/week. Weeks they make more, the application takes it and puts it aside. Weeks they make less, it either pulls it in from a reserve, or an instant loan is made. Costs us…
That does depend how much and how often you need to borrow money. If twice a year I need to borrow $50 but pay it back the next month, that's equivalent to a 13000% APR loan rate (~$150 for the convenience of borrowing $50 for a month twice is equivalent to borrowing $50 and paying back $125 the next month, 150% per month or 13000% per year).
It doesn't have the same risk of spiralling out of control, but for small short term loans this is a really expensive thing to do.
Edit - For comparison, $150/year is like borrowing $2800 at 10% and paying it off in a year.
Earlier quoted context omitted.
Making automatic loans sound very similar to sms loans, which is a common cause for people falling into incurable debt. It mean less insight and less responsibility, targeted to those who lack financial skills. That could make things better in theory, or things much much worse if the incentives are to get people to take unnecessary and expensive loans.
They say they aren't loans, but credits. It's not clear that you actually become indebted to them.
"A bank that automatically manages its customers' finances. Pays their bills. Balances their budget. Saves and invests. And at the tip of the iceberg, gives each and every customer a weekly paycheck of purely disposable income. "
So not only is the income you get each week stabilized - the long term intent is the income you get is solely above and beyond bills and, presumably, investment goals.
At some point - Even could issue debit cards, link up with paypal accounts, and literally supplant the banks that they are working with currently.
Loans are a tricky concept, and Even is attacking a very appropriate market - more than 69% of payday loans are used just to pay normal bills, counter-intuitive to what I would have guessed (emergencies such as health and auto-repair are only around 16%).
Some math: $3 a week = $156 a year - savings of ~$360 versus average payday loan interest. 12 million people use at least one payday loan during a year, with numbers skewed as a higher % of population in states with "looser" regulations on payday loans (6.6% of pop) rather than states with "very strict" regulation (2.9% of pop). Average loan = $375, 8 separate loans taken during a year, plus $520 on interest payments across all loans. 6 of those 8 loans are actually extensions of just 2 loans!
If regular bills are budgeted for, and the money is literally reserved by Even, that eliminates the need for 70% of all non-extended payday loans. Add in budgeting for emergencies, and 84% of payday loans are gone - so whatever interest they do or do not charge for the other 16% is not going to approach normal interest costs.
As jawns points out - majority of loans are because people can't afford their bills...
Since they are FDIC insured - I'll assume they operate like a standard credit union overall and are buffering people's loans using other people's savings...again they also claim they want to invest people's money for them.
This interest free loan makes it VERY susceptible to fraud or abuse. Lets consider for example, a technology contractor, making $120,000 a year from various contracting jobs. The contractor could sign up for Even, and then retire, collecting a $2500 "paycheck boost" interest free. I think this idea has a lot of value, but their current business model can't be profitable.
It sounds like the signup process will be fairly high-touch, to evaluate whether they're a customer Even wants. Given that this involves a fairly complete opening of the kimono, I doubt Even would let someone who makes $120k/year sign up.
This interest free loan makes it VERY susceptible to fraud or abuse. Lets consider for example, a technology contractor, making $120,000 a year from various contracting jobs. The contractor could sign up for Even, and then retire, collecting a $2500 "paycheck boost" interest free. I think this idea has a lot of value, but their current business model can't be profitable.
The interest free part of course limits them from generating profit directly that way, but alternate revenue models are certainly possible on top of the $3/week users have to pay on a continuous basis. > The contractor could sign up for Even, and then retire, collecting a $2500 "paycheck boost" interest free. I'm not sure how things play out legally with them claiming to not be a lender, but I doubt the Even team has…
Part of me thinks that this is Even's first pivot. See if there is a market and then see if and how they can monetize it.
This interest free loan makes it VERY susceptible to fraud or abuse. Lets consider for example, a technology contractor, making $120,000 a year from various contracting jobs. The contractor could sign up for Even, and then retire, collecting a $2500 "paycheck boost" interest free. I think this idea has a lot of value, but their current business model can't be profitable.
Someone who has assets (retiring) that owes a business money is probably going to get sued.
Combined with the old adage about spending less than one earns and the result is happiness.
tl;dr App called "even" allows people with incredibly variable income (case study is on a massage therapist, lots of money one week, little the next) to even out their income. They evaluate their income history, then offer a stabilized value, say $380/week. Weeks they make more, the application takes it and puts it aside. Weeks they make less, it either pulls it in from a reserve, or an instant loan is made. Costs us…
For once I wished I came to the comments before reading. It was an interesting article, but it is definitely full of fluff
I would kill to get an article like that written - it's lengthy, detailed, has an accurate representation of the actual function of the app with tone a that's not breathless or sycophantic, and just the right level of skepticism thrown in so that readers believe a deep, detailed analysis has been done and that this is the future.