The Mark-up on Short-term loans

Feb. 25, 2010 - PRLog -- Short term loans range from £75 - £750, with the typical interest being 30% for a 30 day loan. This means a borrowed loan fro £100 will cost £130 at the end of the month, simply the cost of the service and the cost of borrowing. This interest rate has been scrutinised by consumers as being too high for this service, however when compared to the mark-up retailers place on other emergency or everyday services it may not be as high as it seems.

Cash Genie Mark-up vs Taxi Service Mark-up
Cash Genie, the short term loan provider, argues that their interest rate of 30% has been adopted because of their simple online paperless application process, quick payment of loan into customer’s accounts, responsible lending policy and good customer service. It is the lender’s best interest to offer these additional services to better compete within the market, which primarily does not compete on price. Cash Genie emphasises that the short term loan should be used for emergency purposes to keep customers tied over till payday. This can be compared to a taxi service; customers are not expected to use this service often and mainly use it in emergencies. A journey which would cost £5 to drive could cost up to £20 for a taxi service, with the mark-up in this case being 400%. Obviously there are some advantages of using a taxi service over driving yourself, however benefits are also gained by using a payday loan as an emergency means of gaining fast cash.

Everyday Services Mark-up

Retailers place varying mark-ups for everyday products and services, in some cases for example:
•   Retail high street fashion mark-up = 200-300%,
•   Jewellery mark-up = 100-200%
•   Furniture = average 60%
•   Bike = 35%
•   Consumers pay 80% more for farm goods in the shops than they would if they bought from farms direct (www.nfu.co.uk)
These mark-ups are unquestioned by consumers, because consumer knowledge of the cost of these products for businesses is scarce. In this sense, the short-term loan industry is transparent as consumers know how much they are getting, how much they have to pay for the loan which the loan provider is profiting on. The mark-up for a Cash Genie loan is less than the mark-up for the products listed here, however because of the transparency of the industry and the increased knowledge of consumers, payday loan lenders are being scrutinised for the interest charges.





Retail clothing
The average markup from wholesale to retail price depends entirely upon the commodity. Retail high street clothing is  marked up 200-300%, whereas machinery might be marked up only 35-40%.
Farm foods
Consumers are being hit with huge mark-ups on farm produce, according to the National Farmers Union (NFU).
In some cases, consumers pay 80% more for farm goods in the shops than they would if they bought from farms direct.
Jewellery:

hats and scarves: 50 to 70 percent markup;

formal clothing: 50 percent markup.

Jewelry has abnoxious markup that can range 100-200% or more, furniture stores typically carry 35-45% Gross Profit markup.
Mobile phone
http://www.billshrink.com/blog/mobile-cell-phone-plan-cos...
Furniture
furniture - 60% is about average. When we purchase wholesale, it is usually a discount of 60% to the trade. That is why they can have such great sales!
After doing some research, the answer can be from 40 - 300%. 100% may be considered 'normal'. It is reported that stores that mark up higher do so only as a sales gimmick. A high mark up is not the intended sales price. Instead, these stores will typically advertise large sales of 50 - 75% off their retail price. In these cases, the item being sold is not the furniture but rather the discount. Experts warn not to be taken in by the "sale".

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Cash Genie is an online based lender of short-term loans. Our loans range from £75 – £750 and can be deposited in customer’s bank accounts on the same day as the application.