On one hand this seems openly predatory toward lower income couples who are more likely to divorce and more likely to need the money but on the other I'm surprised that there are investors who want to absorb years of handing out loans, basically giving away money, to then become a debt collecting business that will be threatened by default rates. And who wants to run that business where you give people money, wait for their nasty divorce and then harass them into repayment (not that people don't repay their debts, but in all honesty harassment is inevitable here).
What a horrible product to offer. Couples planning to marry will almost certainly be more optimistic about their chances for eventual divorce than the facts warrant. And even if they're realistic, there's immense social pressure not to admit it. This company's business model is basically going to pressure people into signing up even if it's a bad decision. And then to cap it off, they'll be collecting on the debt right when couples are going through a terrible time.<p>I feel like this is the sort of business that Martin Shkreli would start if he were outright evil instead of just a sociopath.
On one hand, I find it cynical and clever and appreciate the idea the way I appreciate black humor. On the other hand, I hope they get shut down. This is toxic and will cause problems:<p>1. Because people will see it as free money, it's likely to increase expenses for weddings which are already too high<p>2. It's extremely problematic in case of abusive relationships. They have a clause saying that the abuser is liable to repay the entire amount but that would not help a lot (most) people who escape from an abusive relationship. In many cases, people who've been abused will not want it to become known. There's a lot of reasons for it (the perceived stigma of having been abused, blaming themselves for having been abused, not wanting to cause problems to their ex,....). That means that a lot of abused people would still be stuck with the bill at the end. It also creates one more barrier to escaping from a an abusive relationship which is already hard enough.<p>This I believe is a net loss for society and will cause sufferings. Even if it might save a few couples who will work it out instead of facing the consequences of paying back the loan, it won't balance the number of people who stay in very bad situation just as a consequence of having had a slightly grander wedding party.
Surely there must be some doubt as to whether it's possible for the contract to be legally binding. Say that a woman divorces her husband because he's abusive. Must she then pay back her share of the loan?<p>Their website only appears to be interested in advertising this to straight white couples, which seems odd. (I'm not "offended" by this, but it's shitty advertising.)
Why would you want to spend $31k on a wedding when you can spend that over a couple of years and create literally months of amazing memories, travelling and/or experiencing things together? I'd like to think the kind of people spending that much can do both, but the article claims this is the 'average cost'. wtf?
I am having trouble figuring out how in the world they can make the numbers work.<p>- The lowest possible rates I've seen for personal loans are ~9%.<p>- From the article: over 50 years the "cumulative divorce rate of ever-married women approached 40 percent".
- 22% of divorces are caused by financial dificulty (<a href="https://www.institutedfa.com/Leading-Causes-Divorce/" rel="nofollow">https://www.institutedfa.com/Leading-Causes-Divorce/</a>), so assume there is no money to get back there.<p>So for an investor to think giving out this type of loan is better than a standard personal loan the minimum rates they could offer would be 9 / .6 (stay married) / .8 (already bankrupt) = ~18.75%.<p>And there are all kind of unfavorable terms in this loan:<p>- it's a bullet loan so there is no incremental income stream (at least until the divorce)<p>- you have to track people's marital status to see when loans are due<p>So for the best qualified people you have to charge ~18.75% to come close to breaking even on the returns from a normal personal loan at which point you start having to worry about usury laws that cap the interest that can be charged.<p>Maybe their algorithm is just going to select for couples with high credit rating that they think will get divorced soon. But once it becomes known that getting approved for one of these loans is a strong signal of getting divorced it seems like people would shy away from them.
Sign me up for the Las Vegas franchise. I'll be f ing running that town within 10 years. It fits in well with my paramour introduction service business and my marriage dissolution insurance business ideas. I love finance geeks.
I would also recommend a perfect present for the new couple - a smart bedroom IoT CO2 meter that would help to keep the nasty CO2 levels in the bedroom inside comfortable levels such that the new couple can enjoy healthier and happier future together.
How often does divorce lead to bankruptcy as a side-effect? Will that influence the ability to collect?<p>This seems like a pretty sketchy idea just on the numbers side of things.
Even given a divorce they would see no interest or payments for most of the life of the loan - probably 5-10 years on average at least. And these are unsecured loans with the money probably going towards a wedding so there aren't going to be any assets there. The interest rate will have to be insane and even then they're going to have a hard time raising money.
In my opinion, this is a tricky way to convince thousands of couples to apply - and therefore provide data, etc - without any need to give the 10k to all of them.<p>Smart marketing move, but... What happens to OUR data if we're not selected to receive the 10k?<p>Can I guess? The company keeps the data and uses it whether you like it or not.
What happens when this company fails? I would assume the debt would be auctioned off, and a firm that specializing in this sort of investment would scoop it up at a discount.<p>It would be hilarious if they auctioned off the contracts separately. You could have couples (or a shill) showing up to bid on their own contract!
If you were an automobile engineer and you discovered a car part that had a 30 to 50% failure rate, resulting in total destruction of the car, despite the fact that the part was sold with a stellar, inspiring, lifetime guarantee, what conclusion would you rationally come to?<p>Would you at least buy insurance for that part?
Can I bet this startup will fail? Seriously there's no way the SEC and government will allow this. You can't just create any financial instrument you want and expect the government to just twiddle their thumbs and be ok with it. Otherwise we'd have eBay futures a long time ago.
this is a phenomenal idea. priced like a fixed instrument, the stronger a relationship, the lower the price and the higher the interest rate. the site should allow wedding guests to hypothetically buy or sell a share of this loan (it must be hypothetical in order to avoid security law). if the hypothetical interest rate approaches zero then the couple can rethink their union and have an out clause: this 'loan' should be structured with an upfront fee that the company can collect from the couple if they decide to cancel this contract before the wedding.
I wish we could have done this for our wedding. Wedding costs are ridiculous. I had no idea how many little things there are, even when trying to do it as cheap as possible.