>Sarita often heads down to a local pawnshop and pledges her jewellery as security for a loan that comes at a staggering interest rate of 30-35% (compared to 2-5% from a bank)
2-5% from a bank? What kinds of loan are we comparing? That seems unreasonably low for something comparable to a pawn shop.
As for 30-35%, short term loans are labor intensive with limited upside. If you roll the fixed costs into the APR then yeah it's going to look like usury (and maybe it is).
It is a good point that automated "underwriting" (I am skeptical that there is much more than a rubber stamp going on there) has the potential to reduce the labor costs.
But some quick, imprecise googling has Klarna at 20% and Affirm at "0-30%". Isn't that for luxury shoppers in the developed world?
I feel like I've been hearing about defi for 10 years now but not much has come of it. The last big fad I remember was microlending, which seems pretty dead.
