THE BLOG

01
Apr

How to Start a Payday Loan Business

  • How much does it cost to open a payday loan, car title loan, or installment B2C loan company?
  • How do I become a payday loan, car title loan, or installment B2C loan lender?
  • Is starting a payday loan, car title loan, or installment B2C loan business a good idea?
  • What are the costs of a payday loan, car title loan, or installment B2C loan startup?
  • Do payday loans, car title loans, or installment loan B2C loan companies earn significant profits?
  • How profitable are payday loan, car title loan, and installment B2C loan companies?
  • Is the payday loan, car title loan, installment B2C loan industry growing?
  • Who is the biggest consumer loan company in the USA?
  • Do payday loan, car title loan, installment B2C loan businesses make money?
  • What are the subprime consumer dangers of using payday loan – cash advance businesses?
  • What are the disadvantages for consumers who use a payday loan, car title loan, or installment B2C loan company for solving sudden financial emergencies?
  • How do I start a small dollar, B2C consumer lending business?
  • How do I start a B2C finance company offering installment loans, payday loans, car title loans…?
  • Is using a payday lender a good idea for consumers?
  • Are payday loan lenders illegal in the USA?
  • How do I start a payday loan, car title loan, or installment B2C loan business?
  • Are payday loan, car title loan, installment B2C loan businesses profitable?
  • How much does it cost to open a consumer loan company?
  • Can I start my own payday loan, car title loan, installment B2C loan company?
  • How do I start an online payday loan, car title loan, installment B2C loan business?
  • What is the profit margin for payday loan, car title loan, and installment B2C loan businesses?
  • How do I start a consumer loan company?
  • How much does it cost to create a “lending money to the masses” loan company?
  • How does a payday loan, car title loan, or installment B2C loan business work?
  • How much do payday loan, car title loan, installment B2C loan lenders make?
  • How much money can a consumer get from a payday loan, car title loan, or installment B2C loan business?
  • How do I start a B2C consumer-focused money lending business? Not MCA’s [merchant cash advances].

How much does it cost to open a payday loan, car title loan, installment B2C loan company?
The answer depends on whether you’re launching a consumer loan online business or a brick-n-mortar loan business. GENERALLY, startup costs for businesses that loan money to the masses are as follows.


NOTE: For a thorough discussion, ROI expectations, licensing models, recommended vendors, online vs storefront pros and cons consider investing in our “bible,” The Business of Lending to the Masses. It’s 500+ pages delivered immediately to your inbox in PDF format.


  • Again GENERALLY:
  • For entity formation budget $800. This is for your C-Corp, LLC… Consult your CPA for the most suitable business entity for your situation.
  • A bond. Budget $500/year.
  • LMS [Loan Management Software] Budget $2000 – $10,000 one-time setup fee plus an additional $200 to $1000 per month subscription fee.
  • Insurance budget $200/month
  • Payment processing: Of course, this will vary based on your volume. Approximately $1 to $2 per transaction
  • IBV {Instant Bank Verification]. You’ll want to evaluate your borrower applicant’s bank account, and income, and view debits/credits for underwriting the loan.
  • CAC: [Customer Acquisition Cost]. Budget $200 to $400 for a funded loan. [Again, refer to our “bible, “The Business of Lending to the Masses” for strategies & tactics to reduce this cost.
  • Legal fees. Zero$ to $5000. Many states offer DIY solutions. You simply visit the Department of Financial Institutions of your chosen state and download the licensing applications.


Do payday loan, car title loan, installment… B2C loan companies earn extraordinary profits? Yes!
Average APRs are 200% – 800%. [This depends on your licensing model [state/tribe, the financial products you offer, online vs storefront vs blended.] Again, refer to our “bible.” Typically, subprime borrowers fail to pay off their loan principal. Instead, they often choose to pay their fee and “rollover” [react]their loan. It’s a good business practice to insist that at least a portion of their loan principal is paid down every 2 weeks.


Payday Loan, Installment Loan, Title Loan APR's vs Banks
Payday Loan, Installment Loan, Title Loan APR’s vs Banks


How profitable are payday loan companies?
Ah, the REAL question! The answer? IT DEPENDS. It depends on the licensing model you employ [state/tribal/offshore]. It depends on the financial product(s) you offer [payday loans, car title loans, installment loans, line-of-credit loans…]. It depends on how you deploy your capital and how large your portfolio is. It depends on what percentage of “reacts” vs new borrowers make up your loan originations. [Online, brick-n-mortar, blended…]. Let’s examine the storefront model vs the Internet model. And let’s ASSume you plan to eventually scale to 50 locations and service 5 states.


Store ModelOnline ModelTribe Model
5 state licenses5 state licenses1 tribal license
50 locations = 50 leases
[Avg. $1200/mo]
1 lease1 lease
2.5 headcount per location = 125 employees + district mngt., corporate…1510
Multiple loan products for each stateMultiple loan products for each state1 – 2 loan products
Significant legal/compliance feesSignificant legal/compliance feesMinimal legal/compliance fees

Note: This is a VERY simplified breakdown of the pros and cons of the 3 business models. Think of these metrics as ratios rather than a rigid schedule. There are too many variables to account for here. Consider:


  • How “seasoned” is your portfolio.
  • Your cost of capital.
  • Operations management savviness.
  • Your tribal revenue share agreement.
  • Specific states you operate in and allowable fees.
  • Brick-and-mortar lenders experience lower default rates than online lenders.
  • Your loan product offerings [payday. car title, installment…].
  • Your vendor selection regarding customer acquisition, underwriting, payment processing, loan management software, first-time payment defaults, collection mindset & systems employed.
  • And on and on and on.

In general, subprime consumer loan businesses experience a 10% – 30% gross margin monthly. Of course, there are outliers. Again, it all depends…


Is the consumer lending industry growing?

Absolutely! Depending on who funds the study, it’s estimated that as many as 50% of US households cannot access $400 when faced with a sudden emergency. Inflation, higher food costs, gasoline and shelter costs are increasing this percentage! Not only is B2C lending increasing. Add BNPL [buy now pay later], early access to wages, free finance platforms like Dave.com and it’s obvious our industry is heating up!


The consumer loan industry is distinguished by a multitude of small-to-medium state-licensed lenders. Barriers to entry vary by state because some states have more stringent regulations on consumer lending and many have implemented a 36% APR cap and/or a database. This situation drives more competition into the more friendly states. The bank model and the tribal model play a stronger role in these non-friendly states.


Who are the behemoths in the consumer loan industry?

A few are Curo, Enova, Avant, TitleMax, Check into Cash, and Ace Cash Express. The top four companies in the industry account for less than 10.0% of total industry revenue


Do B2C loan businesses make money? Most certainly! Refer to “How Profitable are Consumer Loan Companies” above.


How do you begin the process of launching a payday loan, car title loan, installment loan… business?

Begin here with our 500+ page eBook, “The Business of Lending to the Masses.” It’s available for immediate download in PDF format. We thoroughly discuss how to start your own payday loan business, car title loan business, and personal, noncollateralized loan business using both the storefront and the digital online models. We continue with strategies for collaborating with sovereign nation Native American Indian tribes, the bank model, and state licensed models. Finally, we discuss real-world examples regarding:


  • Can I start my own consumer loan company?
  • Demographics
  • Customer acquisition
  • Underwriting
  • Processing consumer loan applications
  • Instant bank verifications
  • ACH, debit card, E-check… payment mechanisms
  • Default rates
  • Collection strategies
  • Debt sales
  • Related consumer products & services
  • Location research tools and tactics
  • Pro forma Excel spreadsheet
  • Business plan template
  • Raising capital
  • State consumer loan laws
  • Federal consumer loans and compliance
  • Vendor recommendations for consumer loan providers [Loan Management software for example]
  • Legal counsel recommendations
  • Determining whether a consumer loan borrower applicant is eligible to borrow
  • Day-to-day operations
  • KPIs – key performance indicators
  • Obtaining merchant services
  • Your website – resources, best practices, templates…
  • Considerations for building your consumer lending brand
  • ROI, profit margin projections & improvement strategies
  • Obtaining your appropriate consumer loan license
  • Configuring your consumer loan lending guidelines and loan products
  • The costs involved with creating a consumer lending entity
  • State consumer lending entity corporation filing fees, bonds, and ongoing fees
  • Standard loan agreement templates
  • How do payday loans work?
  • The payday loan consumer’s payment process. Weekly, Biweekly, monthly… Personal checks vs. bank account access
  • State-by-state legal fees regarding APRs, reacts, and new loan originations
  • How much capital do you need to start a consumer loan finance company
  • How to hire talent to run your consumer loan business
  • AND much, much, more!
  • Literally, everything you need in a box to launch and scale a consumer finance business



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15
Feb

California Consumer Finance License & California Deferred Deposit Transaction License

CFL Annual Reports for Calendar Year 2021 Due March 15


All DFPI California Financing Law (CFL) licensees are required to submit an annual report on or before March 15, 2022, even if the licensee had no business activity in the calendar year 2021. The Department strongly recommends licensees start gathering the data now to ensure they can timely file their 2021 Annual Report.


The CFL annual report is required pursuant to Financial Code section 22159(a). Failure to submit the annual report by the due date will result in penalties pursuant to the Financial Code section Financial Code section 22715(b).


The form and instructions for submitting the annual report are available on the DFPI’s website here. Annual reports must be submitted electronically through the DFPI portal account. To sign in to or register for a portal account, go to the DFPI’s website. If you have questions about your portal account, please contact the Account Administrator (Albert Mercado) at (213) 220-5140 or email Albert.Mercado@dfpi.ca.gov.


For questions about the content of the report or clarification on the instructions, please email CFL.Inquiries@dfpi.ca.gov or call (866) 275-2677.


CDDTL Annual Report and Industry Survey Due March 15


Payday Loans


All California Deferred Deposit Transaction Law (CDDTL) licensees must submit a 2020 Annual Report and Industry Survey to the DFPI by March 15.


The Annual Report and Industry Survey must be completed online through the DFPI self-service portal. To prepare and submit the required reports, all CDDTL licensees are required to have a registered DFPI portal account.


The Annual Report and Industry Survey are required by California Financial Code sections 23026 and 23015. If you have questions or need clarification on the instructions, please email RespondToCDDTL@dfpi.ca.gov.


How to Start or Improve a Consumer Loan Business: Storefront or Internet anywhere!

How to Start, Improve, Scale a B2C Consumer Loan Business. $237.00

How to Start or Improve a Consumer Loan Business: Storefront or Internet anywhere!

If you’re worn out spending hour upon hour searching Google for consumer loan business strategies, know-how, software, licensing, consumer credit reporting, sample contracts, collection tactics, profitability, how much start-up capital you need, anticipated default metrics, and on and on and on… Our “Bible” delivers ALL THESE ANSWERS AND MORE!

How to loan money to consumers! Payday loans, car title loans, installment loans, line-of-credit loans… via the Internet, and storefront models.

  • $237.00 How To Start a Consumer Loan Business:
  • Our 500+ Page Manual Chapters:
  • Profits: Consumers pay $10 – $35 per $100 Borrowed
  • How to launch a consumer lending business
  • Payday Loans
  • Small Dollar Loans
  • Installment Loans
  • Car Title Loans
    Personal Loans
  • Signature Loans
  • Non-Secured Personal Loans
  • StoreFront Lending
  • Internet lending
  • Licensing? State/Province
  • What loan management software to use?
  • Capital required?
  • Profitability?
  • Collections? How to Collect Your $$
  • Borrower Underwriting? 3rd Party Credit Reporting agencies for the Sub-Prime
  • Store & Internet Lending tactics & strategies
  • Sample contracts, License apps…
  • Tribe Model: How to Partner with a Native American Indian Tribe
  • How to Deliver the $$ to Your Borrower [ACH, Debit, Cash, Checks…]
  • Texas & Ohio CSO/CAB model
  • Marketing, Branding, Advertising: How to Put Your $$ to Work
  • Leads: Buy $2 leads or $200 Leads?
  • Web Sites: Why You Need Them. How to Get One Built Inexpensively. Mobile-Friendly…
  • Site Selection: Where to Put Your Loan Store
  • Default Rates: How Many Borrowers Will Fail to Pay You
  • Email Strategies: How to Build Your Own List
    No More Faxing of Documents
  • How do You Raise $$: Cost of Capital Today
  • $237.00 PDF Immediate Download
    100% Refund Policy
  • Here’s a Link to our Founder’s LinkedIn Profile

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04
Jan

Experienced Online/Fintech B2C Leader Available.

Experienced Online/Fintech B2C Leader Available. 

Attention all Lenders. Jer here. An extraordinary operations executive reached out to me today. He’s on the hunt for his next assignment. It’s my pleasure to provide those of you in need of serious help navigating 2022 to explore how he can enable you to launch/improve your lending operations, book of business, transition to online lending, substantially improve your ROI & IRR… Here he is: 


I enable my B2C lender clients to create high-performing, user-friendly lending systems and platforms with a focus on digital lending and multi-channel delivery via both State & Tribal lending models.

I have nearly 10 years of successful experience building tribal & state-licensed online lending models as CEO, COO:

  • Launched & managed multiple multimillion-dollar [USD] online B2C small-dollar, subprime short-term installment loan portfolios.
  • Highly competent in managing Tribal Council relationships & building infrastructure.
  • Skilled at capital raises.
  • Highly proficient at enhancing portfolio ROI’s via AI [Artificial IntelligenceI] machine learning, and transitioning storefront lenders to online lending.
  • Omnichannel marketing/customer onboarding/retention.
  • Data analysis & Modeling (KPI). Segment ROI. Risk vs Profitability.
  • Risk management & regulatory compliance for all federal, tribal & applicable state laws.
  • Call center operations.
  • Payment processing
  • Banking & law firm relationships for subprime lenders.
  • 3rd party vendor vetting & negotiations…  
  • I will consider both full-time, remote & on-site collaborations. Open to relocation.

Let’s arrange an introductory call and explore! TLE@LeaningRockFinance.com 

Experienced Online/Fintech B2C Leader Available.
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06
Dec

The National <36% APR Theme is Gaining Ground. You're a "Lender to the Masses?"

Attention all Subprime Small Dollar Lenders! Did you miss this?

The national <36% APR theme is gaining ground. You’re a “lender to the Masses?” Read this, digest it, assemble your team, plan to survive & prosper.

  • How will you deal with these issues? 
  • Shrinking margins
  • High cost of capital
  • Legacy storefront lease payments
  • Headcount
  • Outdated loan management platforms
  • Fraud
  • Transition to online digital channels
  • Increasing [CAC] Customer Acquisition Costs
  • Competition – Sovereign Nation Tribal lenders, Pawn, BNPL [Buy Now Pay Later], Early access to wages, Dave.com platforms…
  • Acquiring, underwriting, funding, payment processing, customer service… via smartphone form factors.
  • Gaining awareness and introductions to the latest, most technologically advanced platforms, systems, and vendors delivering state-of-the-art solutions including [IBV] instant bank verification, [IWV] instant wage verification, and AI-powered debt negotiation platforms enabling your borrowers in default to literally “negotiate” with an artificially empowered engine thus reducing your collections department headcount while avoiding the customary strategy of selling your 60+ day bad debt for $.04/dollar.
  • Do you have a clue as to what organizations are continuously pushing for legislation that places a 36% cap on APR rates? Surely you don’t think this is to “protect” consumers from themselves! They ALL have agendas and it’s certainly NOT helping the masses extricate themselves from perpetual debt and serfdom!
  • Comprehending the revolutionary impact of DEFI on financial services and navigating implementation. ACH rails, funding, remittance… is already experiencing upheaval.
  • The masses will ALWAYS live paycheck to paycheck. Will you evolve and remain able to serve them profitably and fairly given the risks associated with serving the subprime? Are you aware that the “prime” consumer today will become the “subprime” consumer tomorrow? Or, will you abandon the business of lending to the masses and open a yogurt shop?

 

Read the following Press release! Know that my Team is a B2C Lender, investor, consultancy, conduit, Native American Tribal specialist, networker, and in daily conversations with the savviest executives, operators, and vendors in what I call, “The Business of Lending to the Masses.”

 

Need help? Want to brainstorm? Don’t hesitate to reach out: Jer@theBusinessOflending.com

 

THIS NATIONAL THEME FOR A <36% APR CAP IS CRITICAL!

 

IT WILL NOT GO AWAY!!

 

November 17, 2021: Representatives García and Grothman Introduce Veterans and Consumers Fair Credit Act to Protect Consumers from Predatory Lending Practices. “

 

“WASHINGTON, DC – Earlier this week, Congressman Jesús “Chuy” García (IL-04), a member of the Financial Services Committee, and Congressman Glenn Grothman (WI-06) introduced the Veterans and Consumers Fair Credit Act, to extend small-dollar “payday” and car-title 36% rate cap protections established under the Military Lending Act (MLA) to all consumers, including veterans and their families. This bill will better protect consumers, particularly military personnel, from certain predatory lending practices.” 

 

“A Senate companion bill was introduced earlier this year by Senators Jack Reed (D-RI), Sherrod Brown (D-OH), Jeff Merkley (D-OR), and Chris Van Hollen (D-MD). Representatives García and Grothman both testified before the Senate Banking Committee in support of the bill.” 

 

“Predatory loans trap working-class people like the ones I represent in Chicago in an endless cycle of debt and jeopardize our economic recovery. It’s up to Congress to ensure that families aren’t stuck with unpayable interest rates on loans for a utility bill or baby stroller,” said Congressman Jesús “Chuy” García. “This bipartisan bill expands the time-tested protections of the Military Lending Act to veterans, military families, and other consumers. Congress should act with haste to advance it to protect families from this unpayable debt.” 

 

“Usury has been condemned since Biblical times. Historically, the United States has had usury laws, putting a guard rail up for borrowers. As more and more loans are given online, it becomes more difficult for states to deal with the problem of snowballing debt. The Veterans and Consumers Fair Credit Act is a great starting point to address the influx of foul play by payday lenders who seize on vulnerable borrowers. We already protect military service members under the Military Lending Act, which means that we have recognized the predatory nature of high-interest loans to our men and women in uniform. This raises the question – if it is wrong to allow predatory lenders to target our service members, why is it right to let them target the rest of the community?” Said Congressman Glenn Grothman.” 

 

“This important legislation is critical as consumers across the country try to recover from the financial ruin caused by the COVID-19 pandemic,” said Rachel Gittleman, Financial Services Outreach Manager with the Consumer Federation of America. “We thank Congressmen García and Grothman for stepping up to protect consumers from predatory, high-cost lenders that thrive on the unaffordable debt trap created by the borrower’s inability to repay. This legislation will protect consumers of color, veteran, low-income, rural, and older consumers, who have been targeted by high-cost lenders who see their historic financial exclusion as a ticket to exploitation.” 

 

“The bill was introduced with 15 original cosponsors: Representatives Earl Blumenauer (OR-03), Suzanne Bonamici (OR-01), André Carson (IN-07), Danny K. Davis (IL-07), Sylvia Garcia (TX-29), Sheila Jackson Lee (TX-18), Raja Krishnamoorthi (IL-08), Ted Lieu (CA-33), Alan Lowenthal (CA-47), Carolyn B. Maloney (NY-12), Eleanor Holmes Norton (DC-00), Donald M. Payne, Jr. (NJ-10), Mark Pocan (WI-02), Rashida Tlaib (MI-13), and Bonnie Watson Coleman (NJ-12).” 

 

“This bill is endorsed by organizations including the National Consumer Law Center (on behalf of its low-income clients), Center for Responsible Lending, Consumer Federation of America, Woodstock Institute, Americans for Financial Reform, The Leadership Conference on Civil and Human Rights, League of United Latin American Citizens (LULAC), NAACP, the Main Street Alliance, Jesuit Social Research Institute, Center for Public Justice, Ethics & Religious Liberty Commission of the Southern Baptist Convention, Faith in Action, National Baptist Convention USA, United Church of Christ, Justice and Local Church Ministries, Cooperative Baptist Fellowship, and more.”

 

Read the original Press Release: Click

Jer Ayles: LinkedIn Profile Jer@theBusinessOfLending.com

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19
Nov

FACT: 57% of working families earn above a livable wage in the U.S.


So… that means 43% can barely make ends meet! They need OPTIONS!


Why Households Must Have Access to a Multitude of Choices for Solving Financial Emergencies.


The choices that should be maintained and fought for by humans, voters, politicians 🙂 , lawyers 🙂 ?

Payday loans, installment loans, line-of-credit loans, car title loans, Buy Now Pay Later, Early Access to Wages, collateralized loans [pawn, crypto, art, NFT’s, collectibles, cars, real estate, future earnings…]


Key findings

  • 57.2% of working Americans are in occupations where the median pay is greater than the living wage for families with two working adults and a child. This percentage jumps to 65.3% for one adult living alone, but plummets to 21.7% for one adult with a child.
  • The District of Columbia offers the best chance for two working adults with a child to earn a livable wage. In D.C., 75.4% of workers are in occupations that pay more, on average, than the local livable wage of $20.69 per working adult. North Dakota (71.0%) and Alaska (70.9%) are second and third, respectively.
  • In four states, less than 50% of workers are in living wage occupations suitable for two working adults and a child. In California, 46.9% of workers are in professions that pay more than the local livable wage of $21.76 per working adult — worst across the U.S. Arkansas (47.6%), Hawaii (48.4%) and Louisiana (49.7%) join California as the others below 50%.
  • Even in the most uncomplicated household structures — one adult living alone — between 20.1% and 49.1% of people aren’t in occupations where most workers make above the living wage, depending on the state. In North Dakota, 79.9% of people work in professions that pay more than the livable wage of $13.08 for single adults, versus 50.9% in Hawaii at a livable wage of $19.43.

What’s this mean? OPPORTUNITY! Done right, lending $$ to the masses is doing the right thing for them, for you, for your employees, for your community. 

Know that each of the massive, publicly-traded lenders [think Enova, Curo, Elevate, World Acceptance…] only have a maximum of 3% of our industry. And a few are currently lending to subprime consumers at $300,000,000 per quarter! Unthinkable!!


Read the original @FastCompany Report HERE.

How to Start a Consumer Loan Business
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