Category: payday loan collections

15
Aug

This is Probably a Bad Idea… I Own a Payday Loan Company.

A Seriously Savvy, Experienced Payday Loan Lender Answers Direct Questions About the “Business of Lending Money to the Masses!”

[Jer Trihouse: To be clear, this is not my work! I just discovered this Q & A on an old Thread. Also, you’ll quickly figure out that this payday loan lender has navigated ALL the hoops, challenges and costs of securing a state license. So… like any of us who use the state licensing model, WE HATE TRIBAL LENDERS.]

YOU WANT TO READ THIS!

Whether you’re a lender, a collector a borrower, a scrubber, a loan management software company, a state licensed or tribal lender… YOU WILL LEARN FROM THIS! [Lender Resources]

Question: Do you have trouble sleeping at night?

Payday Lender: Not even slightly!

Q: OK, what are some ways I, as a loan holder, can avoid getting super screwed by the exorbitant interest rate?

Payday Lender: Pay the whole goddamn thing off NOW and never take another loan out from me.

Q: My plan, but sometimes you’re in a hard place, and these guys are the only option. But I totally agree.

Payday Lender: Is it online/tribal? Do they show their lending license? If its tribal, stop paying. Then send a letter saying you will only pay 20% interest.

Default on the first payment then renegotiate is the easiest. Work with unlicensed vendors(tribal or foreign). Not state. They have no teeth with claims because they aren’t obeying the state laws so collecting is hard for tribes if not impossible.

Q: What percentage of your customers are one time (or at least, super rarely) customers compared to the every week sort of customer?

Payday Lender: About half are habitual repeaters.

Q: That’s actually far better than I feared, but still far too many people trapped in that cycle. Any insight into why? Do the people lack skills? Does your area lack jobs? Is there some common theme, like medical bills or bail money that’s very common?

Payday Lender:  It’s lower than the industry average because my business model doesn’t actively pursue reloans. We can’t take more than 2 loans out on a person per year. I have seen everything from my car broke down and I just need this to get me to work; to, repeat offenders who make $80K a year (verified). I really don’t know of commonality I think there’s just a wide range of reasons.

I do have an idea how to fix it. Force contracts to carry an amortization schedule with a minimum number of payments. Say, 10 equal payments for example. Each payment reduces principal (NO INTEREST ONLY). This prevents them from HAVING to take a loan out every two weeks to cover bills. Don’t allow more than 2 loans per household per year, industry wide not just per lender. They will jump from lender to lender otherwise. This should be used as emergency money not a check cashing service.

Look, I make enough money following the rules and playing nice I don’t have to ream them too.

Q: Why is money the most important thing to you?

Payday Lender: Its not but its close. Money means freedom: freedom to live how I want.

Q: And you feel it’s acceptable to use others to get what you want, even if that means that their quality of life is diminished?

Payday Lender: I also feel like this is insulting to my customers. Shit happens and if it happens to someone with awful credit what are they supposed to do? So yeah I profit from that. Does it bother me? no.

I don’t advertise, my customers come to me, no ones forcing them to take a loan. And unlike other paydays I amoritize rather than taking the full amount and forcing them to renew. Instead of 1 huge payment at the end of the pay cycle forcing them to take a new loan. I take small payments for several weeks so if its truly just a bad luck thing. They arent locked into a never ending cycle.

So no I have no qualms about what I do or how I do it.

Whats the alternative? No one comes to me thinking its a wise life decision.

Q:I’ll just be leaving this here… Youtube

I’d like to hear OP’s take on John Oliver’s report (see above link) on pay day loans. Do you think it is accurate?

You sound like a rare breed indeed. Kudos for not trying to milk every dime out of ppl that you could.

Payday Lender: I love John Oliver. I have HBO and watch every episode. This episode made me think a bit about everything else I see though. He paints with such broad strokes it misses the nuance, like the show News Room, I think that nuance is truly where the difference lay.

The interest rates suck, but that’s not the issue. They have to because of the default rate is so high.

If I knew I was going to get my money back I could charge 20% like a credit card. But 25% of the time we lose not just the principal but the entire cost of servicing the loan ( to contrast bank loans have less than a 0.25% default rate). So, that means that the other 75% of payers have to make up that massive loss.

Lend someone 1000 dollars and it costs you 100 to service, so you are out $1100. You have to make $1200 to really make it worth it. So if you lose $1100, 25% of the time, how much do you need to make on the other 75% of the time just to break even. How much is that in interest to the other loans? Do the math…it sucks. And yes 25% is the industry average default on first time payments [FTPD] NOT the total default, that’s even higher.

I do think there’s severe problems with the industry, and that predatory renewals needs to be addressed (see my other comments above). The interest rates aren’t really the problem though… 500% is calculated on 2 weeks drawn out for 52 (so its really 20 to 25% a payment). If you can find me someone who can collect for 52 weeks I will show you the next Bill Gates; it just doesn’t happen.

So here’s the fix. Set a max to 200% APR, then force it carry it for 10 payments and no more than 2 loans a year, that way they have the opportunity to get out of debt, and you can still make some money.

I also think that this is a necessary service. Our customers don’t want to go bankrupt. They want to pay their debts, but that intention doesn’t matter to banks or lenders, so they can’t get a loan anywhere else. I have actually had customers in tears thanking me because they have no other options. The problem is there’s really no regulations on the industry. I can setup with a tribe and basically write my own law. So, some of my compatriots use that so they don’t have to obey state laws; this means they can do dumbass shit like auto fund renewed loans based on some bs contract no one read.

So I have limits, I draw the line, I know the difference between really fucking someone, and just covering my risk.

I am open to alternatives too. If not this what do we have, loan sharks?

Look, you don’t pay me I send you an angry letter; not break your legs.

Here’s a challenge. Tell me a better model. Vet it with financials. I wanna see spread sheets, planning, a well thought out idea. You tell me that and I will not only fund it, implement it with my call centers, staff, but I will even pay for the lobbyist. Hell, if its good enough I would hire you and get you a share of the profits.

Q: So whats the alternative? Illegal loan sharking?

Payday Lender: If you push it out then the loan sharks will come back. Remember prior to the 90s how the mob was pretty powerful in places like Vegas Chicago NY KC Boston(pretty much every major city)? Now they aren’t…

I am all for fixing the regs getting rid of tribal/foreign and repeat loans. Say a cooling off period before they can re-lend.

But It also used to be that you knew your banker. And if you needed $500 to fix your truck to get to work you would walk in and say “Hey Bob I need 500 can I pay you back over the next few months?” The regulatory environment and consolidation of banks broke that. So now where are you to go?

And don’t get me wrong the big banks needed those regs I am all for it.

I’ve seen it multiple times, and again its a very narrow view, and the problem is then everyone’s assumptions are based on that kind of narrow view. For example, who said I have a location? I used to, but stores are like a big “Rob Me” sign, I am online only now, and lend to residents in the state of Nevada and California where I am licensed to operate by the state. You have to go looking to find me, I don’t advertise.

Unlike the guys Oliver is talking about which makes it seem like everyone operates that way.

Here’s the difference between state and tribal.

Because of that state license, I have to follow lending rules in that state, like maximum interest rates, no more than 2 loans per person per year etc. I get audited every quarter to make sure I am doing this correctly (by both states). I pay taxes. I have to keep a bond with the state to make sure if I break these rules I can refund my customers. I can’t auto re-loan. I have to follow state collection guidelines. It goes on.

But on the flip side, I have protections which allow me to file actions against those who don’t repay me.

Tribal/Foreign based lenders don’t have to do any of this. They pay a fee to a tribe then write their own rules. And Oliver is talking about us as if its the whole industry when in reality its about half.

Q: This should be the most visible comment. it explains everything I was wanting to know about this from your side of it. Maybe I am missing something that makes you out to be a horrible person with a horrible industry (which I had previously believed) but you are running a business

Payday Lender: Thank you, I am sending this thread to the friend who put me up to this. She thought I was really going to get reamed. (which in fairness some have but nothing too harsh)

Q: Shit man, people are giving you hell and the credit card companies are cool? You’re filling a void in the marketplace.

Payday Lender: Honestly no ones giving me too hard of a time. It’s all been super civil. I thought it would be a lot worse.

But we wont let you dig too deep of a hole… I want my money back.

So here’s the math on the credit card. $1200 charged. 3% minimum payment and 20% interest is $2310 in Total payments back.

Borrow 1200 from me and run it to term its $2800 So that’s 20% higher than a credit card. But if your credit was good enough to get a card, you wouldn’t be coming to me, so yeah I have to charge more.

Q: How much money would a person need to start a business like this? How does one get into this business?

What happens to a market that is not allowing new talent in to proliferate the business?

Payday Lender: No one said that. I said its hard. The biggest lender in the industry is about to go out of business so there’s about 1 billion up for grabs… go get it if you want it.

Q: What do you mean by this? Do you mean take out s big loan and just not pay it back because they won’t be able to collect?

Payday Lender: No I mean theres about to be a lot of room for upstarts in the industry.

But shit now that you mention that… google biggest payday lender, borrow from him, then don’t pay him back …hes tribal and unlicensed. So unless you live in a few super red states he can’t collect or submit you to a credit agency. Only borrow online. Not in a store front. Stores are licensed.

Q: Could he collect or submit to a credit angency in Mississippi?

Also. Is there anything he could do to get the money back that would have bad effects for me? Could he sue me? Is he likely to do so? Is this a common scam to pull? What am I looking at by doing this? Sorry for all the questions. I only ask because I’m in a really tight spot. And desperately need about 1600 dollars.

Payday Lender: Collections is just annoying calls and you can send a cease and desist.

The credit reporting would have be in the contract, but if its a tribal lender I doubt they do. If its tribal they are breaking state laws, so they cant go to the states attorney to file an action or lien. It also means they really can’t sue either.

If they are a state Licensed Lender in Mississippi then their website or store location would have a copy of the License on their website. If they are state licensed, then they can sue and file actions.

If its a store front its probably state licensed. Online is about 70/30 where 70 are tribal.

If you are interested in the sector look into micro financing for developing nations as well. Cheaper easier, no regs, and a lot of free flowing money from investors.

Q: Would you mind going a little bit more in depth on this? What is micro financing for developing nations?

Micro financing is a kinda cool new idea. Developing countries have no real banking or credit sector. They also have lots of entrapeneurs. The dollar goes a long way there and they dont need much.

500 or so to start a business. So you get 10 to 20 of them together. Each get 500 to 1000 and they share risk with each other. Theres already people in those countries looking for lenders and act as middle men… so lend to the businesses all at a reasonable rate for a high risk investment 20 to 40% since theres a shared risk theres a high liklihood of repayment. And its not your money its investors who can afford the loss. If you are really slick, you set it up as a charity so if the investors lose money its a tax write off so who cares?

Rinse and repeat.

From Jer: You want to know more about “micro-lending?” Start here with “Confessions of an Economic Hit Man” by John Perkins and “Banking to the Poor” by Muhammad Yunus


Q: I’ve seen you haven’t received a lot of support here. For what it’s worth I know you fill a valuable space. People need money they don’t currently have and you provide that to them at a rate that is proportional to the risk the customer represents. Let’s be honest if they qualified for a credit card or any other option, they would use that first. I’d rather have people owe a local business man a few grand rather than owe the mob a few grand. Thanks for doing this AMA, very interesting.

How old are you?

How long have you been doing this?

How much money did you start with?

Did you take out a loan to start?

How comfortable are you living right now?

Payday Lender:

3 years ( I was a loan officer at a bank).

I had $100K of my own and another 1.5 million from investors

No, you can’t get a business loan large enough for a start up SBA just won’t allow it.

I make over 2 million a year and employ 23 people all of whom make over 40k a year + bonuses and benefits.

Q: What’s your professional background? Did you work in other financial service jobs/institutions before you opened your own shop?

Payday Lender: Banking was my background. I was a loan officer out of college.

Finis!

So Dear Reader, what do YOU think? Shoot an email to me!!

Do you want to get started in “The Business of Lending Money to the Masses?” Click here: I WantMore Info.

How to Start a Consumer Loan Business: Installment lending, car title loan lending, payday loan lending, personal loan business

Click This Image for Some Light Reading 🙂 Over Your Weekend!


*************************************
Note to my Reader: This originally appeared here: Thread
And no, it is not me. Apollonius01, if you’re reading this, WE WOULD LOVE TO HEAR FROM YOU! WELL DONE, BROTHER! Jer
************************************

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03
Jan

Payday Loan Collections

Got too many online payday loans defaulting?

Need help collecting on your online payday loans?

Online payday loan borrowers blowing you off? Payday Loan consumers refusing to pay you back on their loan or worse, disappearing on you?

How to screw your payday loan company

Payday Loan Help

Help is here! DO this!! The simple collection tactics still work!!!

Your payday loan, car title and small dollar loan borrowers move often. And, in hopes of receiving an IRS refund, they usually provide a forwarding address to the US Post Office.  (Payday loan borrowers should NEVER do this! Instead, they should use a PMB. If you’re a payday loan borrower, NEVER have your mail forwarded by the US Postal Service  🙂

Here’s a trick we online/store front payday loan lenders use to track you down. It’s the simple task of sending a letter or postcard to your last known address with the words, “RETURN SERVICE REQUESTED” printed on the front. If you’ve moved and you’re forwarding your mail, the post office will return your our payday loan lender’s letter to you with a sticker that reveals your new address!

And again, these folks OFTEN expect an IRS refund so they blindly make this blunder.

Want more tricks and tactics for avoiding paying back your payday loan lender? Get our Manual: “How to Loan Money to the Masses Profitably.” We thoroughly explain every aspect of starting and operating a payday loan, car title, signature loan and line of credit loan business.

How to Loan Money to the Masses!

How to Loan Money to the Masses!

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05
Jan

Example Payday Loan Partial Payment Agreement

Example Payday Loan Partial Payment Agreement

Do you need an example of a payday loan partial payment agreement; sometimes called a “Delayed Deposit Partial Payment Agreement?” [For this form and all the others you’ll need to successfully make money by lending money in the payday loan, installment and car title loan industry, get our “Bible.”]

Let’s face it. Payday loan lenders, car title loan lenders, installment loan lenders, crowd funding and peer-2-peer lenders  must often take a softer approach. Nothing wrong with this. But, get everything in writing AND spend the time necessary to explain the details to your borrower. Do not gloss over this! Invest the time with your borrower to make it clear what your borrower needs to do and what will occur if they fail to meet their obligation.

DELAYED DEPOSIT SERVICES PARTIAL PAYMENT AGREEMENT (CASH)

 

Licensee Name: __________________________      Customer Name _________________________

Address: ________________________________       Address:_______________________________

________________________________________       _______________________________________

Telephone: ______________________________       Telephone: _____________________________

 

Customer acknowledges:

  • I entered into a delayed deposit transaction with Licensee on __________________.
  • The check which I wrote in that transaction has been returned unpaid.
  • The returned check number is _________.
  • The amount of the returned check is $__________.
  • Licensee has added a penalty fee of $___________.
  • The total amount I owe to Licensee is $_________.
  • I wish to make partial payments in order to pay off the full amount I owe to Licensee.

 

Customer and Licensee agree as follows:

  • Customer will make payments to Licensee in satisfaction of the above debt in the minimum amount of $______.
  • Such payments will be made

___Weekly; ___Bi-weekly; ___Monthly; ___Other (Specify:_________________).

  • The payment is due on the _____ day of each ___________; ___Other (Specify:_____________).
  • The payments will be made in cash or by money order. Checks cannot be accepted.
  • Customer is entitled to a receipt for each payment.
  • Customer may pre-pay all or part of the above debt at any time.
  • If Customer makes payments according to this schedule, Licensee will not attempt other collection methods available to Licensee and will not re-present the check.
  • If Customer fails to make the first payment under this Agreement, Licensee is entitled to re-present the original check for payment. At its option, Licensee may re-present the check electronically within 7 business days of the missed payment date, and may separately electronically debit Customer’s account for the penalty fee.  Licensee may re-present the check more than once.  Customer will receive no additional notification of re-presentment(s) of the check.  Customer may incur costs from the financial institution each time the check is returned unpaid.
  • If Customer defaults, in whole or in part, under the Agreement, Licensee may utilize any collection methods available to it under the law. Customer may incur additional costs as a result.
  • Licensee will keep a record showing every payment received from Customer. Customer is entitled to a copy of such record during Licensee’s regular business hours, and a copy of this contract.
  • Upon successful completion of this contract, the original check will be returned to Customer.

 

____________________________________               __________________________________

Customer Signature                                                    Licensee Representative Signature

 

Date: _______________________________              Date:_____________________________

 

                                                                                                  

                                                                                                          DDS Partial Payments Form/Cash

DELAYED DEPOSIT SERVICES PARTIAL PAYMENT AGREEMENT (ACH)

 

Licensee Name: __________________________      Customer Name _________________________

Address: ________________________________       Address:_______________________________

________________________________________       _______________________________________

Telephone: ______________________________       Telephone: _____________________________

 

Customer acknowledges:

  • I entered into a delayed deposit transaction with Licensee on __________________.
  • The check which I wrote in that transaction has been returned unpaid.
  • The returned check number is _________.
  • The amount of the returned check is $__________.
  • Licensee has added a penalty fee of $___________.
  • The total amount I owe to Licensee is $_________.
  • I wish to make partial payments in order to pay off the full amount I owe to Licensee.
How to start a payday loan business

Start a PDL Company

[Want this form for your own use? Need it as a PDF or Word document? Email Jer@TrihouseConsulting.com or invest in our “Bible.” Both our payday loan and our car title loan Manuals include a multitude of aldditional forms, docs, check lists and more.]

Customer and Licensee agree as follows:

  • In satisfaction of the above debt, Customer authorizes Licensee to electronically debit the account on which the check was written. Licensee will use an Automated Clearing House (ACH) method, which is a nationwide electronic funds transfer system.
  • Licensee will electronically debit the account in the amount of $______.
  • Licensee will electronically debit such amount:

___ Weekly; ___Bi-weekly; ___Monthly; ___Other (Specify:_________________).

  • The electronic debit will occur on the _____ day of each ___________; ___Other (Specify:_____________).
  • Customer may pre-pay all, or if electronic debits have been made, the remaining portion of the above debt, in cash at any time. If Customer satisfies the full amount of the debt, this authorization for electronic debiting is immediately revoked.
  • If Customer makes payments according to this schedule, Licensee will not attempt other collection methods available to Licensee and will not re-present the check.
  • Customer will receive no additional notification of these electronic debits from Licensee. Customer may incur costs from the financial institution if any electronic debit is refused for insufficient funds.
  • If Customer defaults, in whole or in part, under the Agreement, or revokes this authorization for electronic debiting by giving written notice to Licensee at the above address, Licensee may utilize any collection methods available to it under the law. Customer may incur additional costs as a result.
  • Licensee will keep a record showing every payment received from Customer. Customer is entitled to a copy of such record during Licensee’s regular business hours, and a copy of this contract.
  • Upon successful completion of this contract, the original check will be returned to Customer.

 

____________________________________               __________________________________

Customer Signature                                                    Licensee Representative Signature

 

Date: _______________________________              Date:_____________________________

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10
Apr

Illegal Payday Loan Company Collects Phantom Debts-FTC

FTC, Illinois Attorney General Halt Chicago Area Operation Charged With Illegally Pressuring Consumers to Pay ‘Phantom’ Debts

The Federal Trade Commission and the Illinois Attorney General’s Office have obtained a court order temporarily halting a fake debt collection scam located in Aurora, Illinois, a western suburb of Chicago. The defendants are charged with illegally using threats and intimidation tactics to coerce consumers to pay payday loan debts they either did not owe, or did not owe to the defendants.

The FTC’s case against K.I.P., LLC, Charles Dickey, and Chantelle Dickey is the agency’s seventh ‘phantom’ debt collector matter.

“This company scared and tricked people into paying debts they didn’t owe,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Working with terrific partners like the Illinois Attorney General, we will keep going after phantom debt scams like this one and shutting them down.”

“The defendants have threatened and intimidated their way into stealing hundreds of thousands of dollars from unsuspecting people all across the country,” Illinois Attorney General Lisa Madigan said. “Between our two offices, we have hundreds of complaints. It is clear they must be stopped.”

According to the complaint, since at least 2010, the defendants used a host of business names to target consumers who obtained or applied for payday or other short-term loans, pressuring them into paying debts that they either did not owe or that the defendants had no authority to collect.

Often armed with sensitive financial information, the defendants would call consumers and demand immediate payment for payday loans that were supposedly delinquent. To pressure consumers to pay, the defendants threatened that they would:

Garnish consumers’ wages;
Suspend or revoke their drivers’ licenses;
Have them arrested or imprisoned; or
File a lawsuit against them.
In response to the defendants’ repeated calls and alleged threats, many consumers paid the debts, even though they may not have owed them, because they believed the defendants would follow through on their threats or they simply wanted to end the harassing phone calls.

The complaint also charges the defendants with failing to provide consumers with a notice containing: 1) the amount of the debt; 2) the name of the creditor to whom the debt is owed; 3) a statement that unless the consumer disputes the debt, it will be assumed to be valid; 4) a statement that if the consumer does dispute the debt in writing, the defendants will verify the debt is correct; and 5) a statement that upon the consumer’s written request, the defendants will provide the consumer with the name and address of the original creditor if different from the current creditor.

Finally, the complaint charges that the defendants: called consumers at work when they knew such calls were prohibited by consumers’ employers; harassed and abused consumers; used obscene or profane language; and called consumers repeatedly with the intent of annoying or abusing them.

The complaint also alleges that the defendants violated the Illinois Consumer Fraud and Deceptive Business Practices Act and the Illinois Collection Agency Act, and that the defendants are not licensed debt collectors as required by Illinois law.

Defendants named in the case include: K.I.P., LLC; Charles Dickey, individually and as an owner, member, or managing member of K.I.P., LLC, and also doing business as (d/b/a) Ezell Williams and Associates, Corp.; Ezell Williams, LLC; Excel Receivables, Corp.; Second Chance Financial Credit, Corp.; Second Chance Financial, LLC; Payday Loan Recovery Group, LLC; Payday Loan Recovery Group; Payday Loan Recovery; International Recovery Services, LLC; International Recovery Services; and D&R Recovery. The complaint also names Chantelle Dickey, also known as Chantelle Rudd and Chantelle Williams, as an individual and as a manager of K.I.P.

The FTC and the Illinois Attorney General’s Office appreciate the Aurora Police Department, North Aurora Police Department, Better Business Bureau of Chicago and Northern Illinois, and the U.S. Postal Inspection Service Chicago Division for their valuable assistance with this matter.

Note: Original FTC Press Release

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15
Mar

1 Simple Payday Loan Collection Tactic

“We’ve been taught to collect only one way. Heavy demand. Lots of thunder. But before you start firing all your collection bullets, how about a different approach?” Steve Hodgdon, founder of Modern Asset Management, reminds all of us to not overly complicate the task of getting borrowers to pay us.

Watch Steve’s short video and put some serious cash in your pocket. [After watching Steve’s collection video, READ THIS!]

The Best Collection Question. The single, best question to get your borrower to TALK to you. Let me know what you think.

Collections driving you nuts? Reach out to Steve.
Steve Hodgdon
President
Modern Asset Management, Inc.
1-415-596-2415 cell
1-800-617-3680 ext 801

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