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Pioneering frontline production
This store turned into a national The Crusade of Sex, because when it hit the market, the spotlight shone on sensitive areas.
Qufenfen, the predecessor of Qudian, is one of the representative companies of campus loans. Not long after it emerged from this quagmire, it stepped onto the altar of IPO. Some people can't understand it. It’s normal to examine Qudian’s “original sin”. If you keep a low profile for a while and pretend to be dead, it's over. But it is obvious that being quiet, low-key and getting rich in a down-to-earth manner is not the character of this group of people.
Zhou Yahui personally wrote a long article to praise himself, and there were almost countless investors who took credit.
Wu Shichun, founding partner of Meihua Venture Capital, said: Meihua Angel’s investment in Qudian has returned more than 1,000 times, while Phoenix Xiangrui Fund has brought an astonishing return of 15 billion to LP shareholders. "In history, there have been no more than 40 cases in which investment companies around the world paid out more than US$1 billion for a single project, and at least 1/3 of them occurred in China. This is an epic comeback record!"
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Qudian founder Luo Min also publicly responded to several public questions about Qudian "Qudian Luo Min responds to everything". It was this article that helped expose more loopholes and fallacies in Qudian and pushed Qudian’s negativity to a higher level. There is also the embarrassment that the stock price plummeted by nearly 20% in a single day, and all business loopholes were exposed.
In fact, Qudian’s business model comes from the “payday loan” product in Europe and the United States, that is, payday loans.
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In the United States, payday loans are mainly operated offline and are provided to those who cannot even maintain basic living expenses. Offer small cash loans. It has several typical characteristics:
The loan amount is extremely small, between $100-1,000. Such a small amount cannot be used for capital turnover of small businesses or small owners, and can only be used for personal loans.
Interest rates are very high. According to media statistics, the annualized interest rate per $100 of this cash loan is as high as 391%;
From the loan amount, user portraits, and user behavior characteristics, it can be seen that Qudian is no different from these payday loans .
Cash loans are currently mainly available online in first- and second-tier cities and offline in third- and fourth-tier cities, and have invaded almost every corner of China.
Those densely packed loan salesmen are scattered on the main streets. Every day at dawn, the cleaning staff sweeps the floor and tears up small advertisements in front, and they scatter business cards in the back; in the dead of night, in the corridors of various communities Stickers hanging out. It is easy to make tens of thousands of dollars a month. If you accumulate enough customers and make a few phone calls, you can get tens of thousands in commission.
There are even more crazy online loans. According to incomplete statistics, there are thousands of them. Offline loans require loan officers and salespeople, and “intermediaries” are also beginning to appear in online loans.
Entrepreneurs and investors alike are beginning to have an epiphany. Cash loan is a "hard not to make money" business.
Since 2015, there has been news about cash loan financing: I borrowed 1 billion, Qianbao 156 million, Quick Loan 80 million, Flash Silver 20 million. Kaifu Lee revealed in a recent sharing, Sinovation Ventures’ “Qianbao” loan last month was RMB 1.2 million, with a monthly loan of RMB 1.8 billion. This is the current state of the industry. The monthly loan amount of small platforms is hundreds of millions, and the monthly loan amount of large platforms is more than one billion, attracting money quickly.
But even in the United States, payday loans are a rat-shit business: most media outlets have been negative about the product. In 2016, Google even decided to ban ads for payday loan products globally.
In fact, judging from user profiles, the income of cash loan borrowers is generally not high. It should be that there are many bad debts and it is difficult for the borrowing company to make a profit. How can they still make so much money?
The real situation is: bad debts do exist, and the high profits of the cash loan business mainly come from higher interest rates and fees. The interest and fees of people who repay their loans normally are used to make up for the bad debts caused by fraudsters and non-repaying users.
For example, a loan totaling 100 million yuan, with a high bad debt rate of 30%, will generate 30 million yuan in bad debts, leaving 70 million yuan in interest income
Cash There is another important branch of loans: loans with small amounts and repayment periods of one week to one month, which are called small cash loans in the industry. Common advertising slogans include “no review”, “no guarantee”, “2-minute loan”, etc.
Many users borrow hundreds of yuan to less than a thousand yuan. Because the amount is small, many platforms promote it as "daily interest" and "monthly interest", which makes users feel insensitive.
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In the United States, the government mandates that all small cash loans be shown at an "annualized rate." Even cash loans are illegal in 14 states and the District of Columbia.
According to our country’s laws, an annual interest rate exceeding 36% is considered usury, and the excess is not protected by law. Although the state stipulates that more than 36% of people are not protected by law, it does not mean that exceeding the law is a crime. Therefore, there are 78 well-known cash loan platforms on the market, with an average interest rate of 158%, among which the highest annualized interest rate of "payday loan" can reach 598%.
In order to cover up such high interest rates, most platforms charge "management fees." These are all to deceive others. In fact, they're fun.
In addition to high interest rates, another huge trap is high overdue fines.
“Sky-high late payment fees” are often exposed in the industry. The daily late payment fee on some platforms is 1% of the outstanding amount. It only takes 100 days, and the fine will be refunded as much as the principal. Magic Cash customer service said that the daily overdue penalty is 74 yuan. Assuming the loan amount is 1,000 yuan, it only takes 14 days for the interest to be rolled into the principal.
Many.
Who would pay such high interest just to get 1,000 yuan a week in advance?
Some insiders said: Cash loan users are all low-credit users, and many of their uses are for pornography, gambling, and drug use, as well as borrowing new loans to repay old loans. There is a lot of fraud in the industry, and cash loan companies often have an ambiguous attitude towards fraud in order to be large-scale and show off to investors. Most of these users will overdue their loans, default on their loans, or even commit loan fraud. Users who are better than them use high interest rates to pay for these old people. In this huge profit game, the "honest" person is always the one who suffers the loss.
The neighboring country Japan had a similar situation 20 years ago.
In 1999, Takei Yasuo surpassed Masayoshi Son to become the "richest man in Japan" with assets of US$7.8 billion. It is the consumer finance company under his own name - "Takefuji" that he relies on.
Takefuji was founded by Takei Yasuo in 1966, and its business is small consumer loans. Takei Yasuo pioneered the positioning of customers as ordinary Japanese housewives.
With the rapid development of urbanization and the improvement of Japanese residents’ spending power and willingness, Japan’s consumer finance has begun to surge rapidly.
In 1998, Takei Fuji was listed on the Tokyo Stock Exchange. In 1999, Takei Yasuo became the richest man in Japan. However, for a long time, the Japanese consumer credit market has not improved in terms of long-term lending, excessive interest rates, violent collections, and damage to borrowers' rights and interests. (Note: At that time, the annual interest rate of Japanese private consumer credit was generally around 30%)
2006 was the "reform year" of Japanese consumer credit. Previously, Japan formulated and revised the Bankruptcy Law to strengthen the protection of bankrupts. In 2006, the Supreme Court of Japan issued the "Interest Limitation Law" stipulating that the annual interest rate of consumer loan companies must not exceed 20%, and all excess interest must be returned to the borrower. The implementation date is June 18, 2010.
The borrowers that Takefuji needs to refund involve about 2 million people, involving more than 2 trillion yen, or about 24 billion U.S. dollars. At the end of September 2010, Takefuji applied for bankruptcy protection to the Tokyo District Court. In October of that year, Takefuji was delisted from the Tokyo Stock Exchange.
In just one year, under strict policy supervision, the entire industry declined.
This game will eventually collapse in China. When the money from the new platform can no longer cover the interest, that’s when the game ends.
But in the final analysis, this is a market that depends on the weather, and the policy winds are blowing. As long as the top does not stop, the bottom can continue to make money.
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