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Often, people who fall into a debt trap start with just one reasonably small loan, a few hundred dollars for a few weeks.

So if your first-time borrowers still pay 200-700% APR, then I don't see how offering lower rates to people who have demonstrated their ability to repay addresses the problem of people who are actually unable to repay falling into this trap to begin with.

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Okay, can we agree that lendup helps people who repay, and doesn't help people who don't? Relative to existing payday loan services.

Yes, I agree. The moral issue is allowing people to take out loans that they are unlikely to be able to repay, based on their personal finance history. I don't (yet) see how LendUp does a better job of that for first-time borrowers than any other payday loan company.

Perhaps this is addressed by limiting the first-time loan amount to something small (like $250), and scraping the borrower's online banking statements as part of the approval process in order to predict (based on the account history) whether they are likely to be able to repay within a month. I don't know.

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