thoughts on sp this week, page-5

I think the legislation will have a detrimental affect on the company but to what degree.....and could it possibly actually do the opposite?

You could provide loans "over the "$2000" proposed maximum however you then have to also deal with the NCCP that the borrower can afford to repay the loan.

Assuming you can do this, which I would gather could be difficult for a fair percentage of borrowers normally only wanting say "$200-$1000" these same borrowers would need to borrow $2001 minimum to be outside the legislation.

The next issue , the loans above $2000 would come under the NCCP unless under 60 days in duration.

If under 60 days in duration, fine, but the lender CCV has to verify that the borrower can actually afford $2000 plus and can verify that they can pay this figure in under 60 days, probably not as easy for some.

So if you were to extend the loan terms out to say 12 months, it would then become afordable, but then comes under the NCCP as it is over 60 days in duration. So again, the lender would have to verify that the borrower could in fact afford the $2001 loan with an interest rate of say 24% p.a.

This would equate to $206 per month, which is possibly beyond what the majority of current ccv borrowers can reasonably afford to borrow given their average loan currently is closer to $1200.

Then you have the issue of is 24% returns acceptable and sustainable given the amounts borrowed?

Im sure the legislation, if approved, will be a little different to the draft proposal in any event and ccv will probably need to adjust its loan types and amounts to be compliant.

All in all, I would think that ccv will no doubt lose borrowers/ customers, but if you think about it, so would all other players, and ccv probably has more chance of long term survival due to its sheer size and presence.

It may actually knock out the small time operators for good, who cant accept 24% on their funds which in turn may then provide CCV with greater market share, albeit at lower returns per loan.

Anyway, just my ramblings for what its worth.