Paypal working capital loan deal

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  TopographicOceans Posts: 6,535 ✭✭✭✭

  January 28, 2016 6:57AM

  What they are calling "loan fees" are just the cost of money, which is in effect interest even though they don't call it that.

  Using their example of a $445 fee for an $8,000 loan.
  What I don't see is the term length, which makes a difference on what the cost of the money is.
  But say it takes you 1 year to repay it, that is 10% annual interest. Better than a cash advance on a credit card, but still rather high in my opinion.

  And their "fee" is based on your sales and % applied towards the loan and what you keep, so it is going to vary individually.

  You would have to get a specific quote to find out your "fee" and then calculate it over the time period it takes to repay it to figure out the interest rate.

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  jt88 Posts: 2,900 ✭✭✭✭✭

  January 28, 2016 7:04AM

  I think there is no time limit until you pay off the loan but there is a minimum payment every 90 days. I think you need to pay 10% every 90 days. Use their example: 8K plus 294 fee for 30% repay. If you make 1K sale a month it will take about 25 or 26 months to pay in full and your cost is only 294. I think that's pretty good.

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  derryb Posts: 36,265 ✭✭✭✭✭

  January 28, 2016 7:07AM

  good deal for the bullion pre-sellers who always end up over extended.

  “The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto

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  jt88 Posts: 2,900 ✭✭✭✭✭

  January 28, 2016 7:17AM

  Sorry, I was wrong if you only make 1K sale a month you can't borrow 8K plus fee. Their example is 100K a year sale so is about 8K a month sale 30% of 8K is 2400 a month repayment. it only takes about 4 months to repay it. So 4 months for 8K with fee 294, it doesn't sound that great.

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  LanceNewmanOCC Posts: 19,999 ✭✭✭✭✭

  January 28, 2016 7:46AM

  .
  
  try a small amount short term to see how the fees work.
  
  
  
  imo, it is probably best for a short-term use, like if you get a big deal or find something with a major upside that is normally out of ones budget.
  
  
  
  it probably cant compare to a l.o.c. with a manageable interest rate, or other standard bank financing/personal loan, mortgage refi., second mort., etc.
  
  
  
  the payback from what i saw is much more aggressive, which is fine, if you prepare in advance for it.
  
  
  
  this is all based on the kabbage model. the pp working capital may be different.
  
  .

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  TopographicOceans Posts: 6,535 ✭✭✭✭

  January 28, 2016 7:50AM

  They have a lot of variables to calculate what their "fee" is.

  Under Federal Law, a lender has to disclose their interest rate.
  I assume if you apply they would have to furnish this disclosure before you agreed (unless a PayPal lawyer weasel figured away around the law by calling it a "fee")

  If you are interested I'd call PayPal and ask what the interest rate would be for your specific situation - how much you borrow plus the fee over the term.

  The $8k with $445 fee over 12 months is 10%
  Depending on the variables the vig might range from 5% on a short term loan to 20% or more?. I have no idea, but I know PP is going to get a good return on the loan.

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