Question

1. Cash Right Now, LLC provides very high interest loans to people with poor credit scores that have a high probability of defaulting on the loan. Many people do in fact default on these loans; however, Cash Right Now, LLC does make a substantial profit overall, even considering these defaults. The people that borrow from Cash Right Now, LLC are unlikely to obtain credit elsewhere. Discuss if Cash Right Now, LLC’s business practices are ethical considering it charges much higher interest rates than traditional banks.

Answer 1

LLC’s business practices are unethical because on the basis credit score LLC business should not charge higher interest from people having low credit score. LLC business should either don't grant loan to the people's having low credit score or should grant lower amount of loan even less than what they should get offered as per their credit score.

So price discrimination in money market is unethical whether from non banking financial institutions (NBFC), LLC business, or even from bank itself.