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GoEasy (GSY)

8K views 66 replies 12 participants last post by  james4beach 
I love the business model, however I have several concerns, particularly with their lease to own service.

1. They prey on poor credit individuals. What happens when they can't pay
- This is hedged by the fact that their prices are so insane, they break even almost immediately.
2. Their pricing is predatory and IMO would violate usury laws, one good consumer protection complaint could destroy this business.
Playstation 4 Pro
@$25/wk for 104 weeks = $2700 over 2 years
Retail
$499.99. << at retail!!!

The rip off level is IMO so bad that
1. To even suggest pricing this bad makes me question their ethics.
2. They're are at huge risk of consumer default
3. They're at huge risk of government action.

I don't do business with unethical people, if they'll screw other people they'll screw you.
 
Seems odd that you said you love their business model and immediately listed all the reasons why most people say they don't like their business model. :p

I'd question the ethics, true. If the government takes action to decrease the legal maximum interest on a loan, they would be hit bad, true. Or maybe they are already at the limit of legal and that could be a risk, true. About defaults, I think their business model is already running smoothly with that risk.
I love the business model, but I think that their rates criminal.
They get the full retain price in less than 6 months, then continue for 18 more months.

I think waterheater companies have the same business model, but the rates aren't quite as bad, and they don't prey on the vulnerable.


I think loans, product financing, futures contracts etc are all perfectly legitimate and reasonable business transactions.
I actually think commodity trading and futures markets are WONDERFUL.

That being said, I have little tolerance that will use these tools to exploit people.
 
I wonder if you have a credit card, and what is the interest rate on such unsecured credit?
High rates are usually related to the degree of risk to the lender.
I used Loan Calculator

$25/wk for 2 years, on a $500 loan is an interest rate of 280%.

Credit cards max out at 30%
Criminal Usury s 60% in Canada

However payday loans are exempt (and limited to 390% in Ontario)

Legal or not, I consider an interest rate of 280% unethical.

Honestly wait 4 1/2 months and save for your PS4, or furniture.
 
Save for your PS4: I agree. You talk as if customers are forced not to save for it.
No, I simply think it's unethical to charge criminal interest rates.
There are more than enough ethical companies out there, I simply choose to deal with them.

I also think poor ethics is a business risk, why would I choose to invest in a riskier business.

I understand that many people see a significant detachment between the stock market and the underlying investment (eg company). That is not my investing philosophy.
 
"Criminal " is your subjective opinion. And since you are not the lender who has a responsibility to calculate risk with clients with no credit rating and bad credit, I think you word "criminal" is blather.
No, when I say Criminal, I specifically mean criminal in accordance with the Criminal code of Canada.
Criminal Code 347
"criminal rate means an effective annual rate of interest calculated in accordance with generally accepted actuarial practices and principles that exceeds sixty per cent on the credit advanced under an agreement or arrangement; (taux criminel) "

Now there is an exception that makes it legal, but yes I hold that charging an interest rate of 280% is a criminal rate, as defined by the Criminal Code of Canada.
 
Well the authorities don't seem to agree with you. This topic has all been discussed in another forum, and no it is not criminal. If you insist it is criminal, call the police and prove it.

Is it ethical for banks to decline to loan money to these folks? You claim that you would only deal with ethical banks, but you don't seem to grasp that the clients we speak of were rejected by the banks. Is it ethical for the banks to turn them away?
The interest rate is by definition a criminal interest rate under the laws of Canada.
The actual arrangement is apparently legal.
I'm sure all sorts of things are discussed on other forums.

Yes, I do believe it is ethical for banks or any other lender to refuse lending services to those unlikely to pay back the loan.
I have not heard any reports that they were refused banking services.
 
1. I'm glad you find it is legal.
2. Why would they go there if they were not declined by the banks? Just cause you don't hear things doesn't make it so.
1. It is currently legal, but it's really on the edge and I think this is a significant business risk.
- I think the rates they charge are criminal, which is the ethical issue

2.They were declined loans, because they shouldn't be taking out loans.
They weren't denied other services, that would be a concern.
 
Obviously what you think should or should not be for other people is you personal opinion. You sound like you want a totalitarian nanny state.
I just identified that I think charging criminal interest rates is a significant business risk, and makes me question the ethics of those running the operation.

From the numbers alone, sure I'd buy this, but I think the risk is too high for me.

Enjoy.
 
A government secured loan from a COOP or charitable organization could do a better job of "teaching" while helping the clients.

Governments have exclusive powers of collection, so the default risk is largely mitigated and they can charge a lower rate of interest.
I don't think it's an education problem.

As for the default risk, it's still there.
The point is that these people are bankrupt or near bankrupt. They have little to no ability to pay the debt back.
 
The point people miss about these alternative lenders is that without them these people would have zero options of borrowing money. Money is a necessity of life. If you take away a necessity of life, from any human, you will find their reactions to it will carry more hardship for them and society, then what these lenders are doing. That is why the government allows it.

It is a competitive industry and it is a service that is as necessary as food.
But the problem is that they'll use these guys, and become even too risky for them, then they're still have needs.

We have to deal with the actual reason how people get themselves into such a situation.
Once they're too far for these, they'll go to even less ethical lenders.
 
A major point of DeFi is that it is permissionless. Half of the population doesn't have access to banks and loans.
No.

Almost everyone has access to banks, and creditworthy people have access to loans.

If you can't get a bank account, you're likley not going to be able to get access to crypto.

If your current credit history is so bad that nobody will lend you money, I can't imagine the cryptspace is going to be all eager to lend you money either.
 
You might want to keep an eye on the progress of Bill C-274, which would reduce the maximum interest rate to 20% over the BOC lending rate.

Adjusting the usury laws are also mentioned in the 2021 Federal budget.

Changes would not likely affect credit cards or payday loans (exemption for the Provinces to decide) but would impact a number of "alternative" lenders.

Rates of lending among the companies typically varies in a range of 39% to 49% per year.

Personally, I don't think it is a good idea to cut of lending sources for people who don't qualify for a bank loan, without being replaced with some kind of other method of financing.

Some companies do report to credit agencies which does give people a chance to improve their credit rating, and that is a good thing.

But it appears, the consumer groups have a different opinion.

Just means the businesses will close, and these people will have no legal options to borrow money.
 
I think the Liberals are acting slow on the changes because they recognize the need to get something else in place for people who need affordable small loans.

Giving access to loans doesn't necessarily have to cost 49% a year in interest, or in the case of payday loans.....600% interest per annum.

Maybe these companies could borrow directly from the BOC at low rates and then charge a more reasonable rate of interest.

If the government is the final guarantor of the loan......they have the power to seize anything, including pensions and government benefits.
What needs to happen is financial literacy and get these people more productive so they have more money.
It's bad to be overleveraged.
 
I agree..........the banks need some education in financial literacy.

These alternative loan companies and payday loan companies are gobbling up the profits.
The banks are poorly equipped to handle the high risk markets.

Great credit customers can today easily apply and get loans with very little (if any) human interaction from the bank side, all the transactions are handled by computer.

Payday loans are a lot more risk, and a lot more work.

If these restrictions are bad, the borrowers will just go to unregulated financial services, which is likely not good for them.
 
GoEasy is a subprime lender, and their success closely mirrors the American credit boom (and mania) in the early 2000s.

We have a runaway housing bubble, record low interest rates, tremendously easy credit (for homes, cars, and consumer goods) and companies like GoEasy are well positioned for the current environment. For example, GoEasy finances home furnishings and appliances, so as people buy homes they can't afford, and fill it with junk they can't afford, GoEasy is there.

I think they are incredibly exposed to the housing and credit bubble (the two are closely related) so they should do fine as long as the credit bubble continues. But they are also very exposed, if the "fun" ends.
When the credit bubble stops inflating a lot is in trouble.

Fortunately it seems that a lot of people used that COVID stimulus money to improve their situations, not to buy crap.
 
Yeah it's impressive.
But they prey on people with bad credit.. at some point the cards will collapse.
I was lookign at Home Capital Group in the early 20 teens, but came to the same conclusion.

Good luck, but it's a risky stock, with IMO predatory practices.
When things go south, it will be fast.

I'd clear a few chips off teh board now TBH.
 
Yeah I think GoEasy and HCG are both sketchy lenders. But certainly correlate with the state of the real estate mania.
There is going to be massive political interference in the real estate and financial markets to keep everyone "happy".
I think it's a pending disaster that will make the subprime crisis look like a well thought out plan.
 
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