Insight & Wisdom in small dollar lending. Digging down below the media headlines… Continued
It’s a fact! Every day, tens of thousands of consumers are using the Internet and their phone to find a local brick-n-mortar or to apply online for a loan.
Borrowers do it from home, from work and from the library. They do it from virtually everywhere in the world including the USA, the UK, Canada, Australia, Korea, Japan, Ireland, New Zealand, the Bahamas and more.
They apply for cash advances and personal loans from states not having favorable payday loan laws such as Georgia, North Carolina, New York, PA, NJ, AZ, KY and Oregon. And, they apply from states and provinces having safe-harbor legislation like Texas, Louisiana, Mississippi, Ohio, Illinois, California, Nevada, Florida, etc.
Is it advisable for you to fund loans to residents in states and provinces lacking safe-harbor legislation? Of course, the answer depends on your business model but expect significant grief from the CFPB – assuming it still exists, State AG’s, compliance expenditures, ACH processing and bank challenges… if you choose to. Even tribes must deal with the FED’s.)
We have clients receiving tens of thousands of installment and cash advance applications every week via the Internet. Typically they fund 15% to 40% of these depending on their underwriting criteria.
And let’s not forget CashNetUSA – now called Enova. You remember! An Internet based payday loan company started in 2004; purchased for $35,000,000 in 2007 by Cash America, a brick-n-mortar player. Then spun-off and an IPO succeeded…
Did you know Advance America launched in the UK 30 days later? On the Internet? Using the CashNetUSA software platform? Unreal! With the aid of the Internet they were able to literally “flip-a-switch” and offer their cash advance product to an entire country!
Now you’re probably wondering how those of you with stores could possibly care about this situation. The fact is, the Internet guys are taking market share from you. Our target demographic is 25 to 50 years of age. Every day our customer base is eroding. It may be a trickle now but it is a certainty if you’re not using the Internet to service your customer base you are not going to reach your potential.
The Internet offers you the ability to provide your small dollar loan product to your entire state/province rather than the 5 mile, 8 mile, 10 mile radius around your brick-n-mortar!
You’re licensed in your state! Why not service your entire state?
By the way. How does your web site look on a smart phone? Whip out your phone and pull up your website. Does it look like CR@#$%P? You better fix this! Type PaydayLoanUniversity.com on your smartphone browser for an example.
Sure, there are challenges. Marketing to a customer base throughout your state/province is a different animal.
Yeah, your team will need to become acquainted with search engine tactics. And how do collect from a client 500 miles away? Hint: sub-prime data scrubbers; CoreLogic, Clarity, DataX… [For their contact info: Resources
I know what you’re thinking. “I’ll need a web site and Internet based payday, installment or title loan software.” Yes, you will need to address those issues. If you attended the last CFSA convention, you know these challenges are not insurmountable. And, if you’ve studied our “How to Make by Money Lending Money: Bible” you already have the answers!
The next issue of Cheklist (sic) Magazine and Currents Magazine will probably provide some answers as well. You do subscribe to Cheklist? And Currents?
Of course you’ve visited Craigs List? The free Internet based bulletin board? We place a free ad in each city we have a personal loan store located in. We average 2-5 funded payday loan applications each and every day from Craigs List depending on the size of the city!
We all know the life-time value of a payday loan customer. $1,200? $2,000? $4500? Higher? That’s pretty good for zero cost!
We’ll cover more of this topic in a future Small Dollar Loan Newsletter.
For now, start thinking about this opportunity. Get up to date.
This topic is not over. We are just getting started.
Comment? Questions? jer@PaydayLoanIndusytryBlog.com 702-208-6736