Spot Loan

You blow the $500 you brought to Vegas in the first 20 minutes. You don’t want to slink off, defeated to the hotel just yet, so you ask your buddy Todd (who had a pretty good first 20 minutes) to spot you 200 bucks. He hands it over right away.

One kind of spot loan.

Now imagine that process turned into a proper business. Payday lenders, loan sharks, and any other provider of quick loans are in the spot loan business. They can hand over cash very quickly, with the loan being approved within minutes with minimal due diligence.

However, there is a downside for the lender. The loans are typically unsecured, meaning they have no collateral to collect in cases of default. The lenders overcome this problem with really high interest rates.