The Credit Services Organization, often referred to as a CSO, is becoming popular in states like Texas for offering payday loans and car title loans. The reason? The state of Texas simply requires a “registration” of a business as a CSO rather than applying for a payday loan or car title loan license.
Additionally, the rates one can charge are not prescribed by Texas statute, unlike a payday loan or car title loan. CSO’s are not subject to the state’s small loan laws or regulation by the Office of Consumer Credit Commissioner! Typical rates for these “loans” are currently in the $20 to $30 per $100 loaned.
What is a CSO or Credit Services Organization? It’s simply a broker that, after reviewing a consumer’s ability to pay, issues a letter of credit on behalf of the consumer to a third party “lender.” The CSO or Credit Services Organization services the “loan”, markets the “loan”, and helps the consumer improve their credit by reporting their payment history to a sub-prime credit reporting agency.
For a thorough description of the step-by-step procedures for setting up a Credit Services Organization - CSO Model including sample contracts, click here to review our 50 page CSO Report.
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The CSO approach works very well and is really simple to setup. My only caution is that if the regulators perceive we are abusing this model they will pull the plug.
MoneyMan
I agree. Too much abuse of anything will eventually get regulated. Hopefully lenders will use it and not abuse it. Payday loans should be open to an individual by choice. It’s not the lender’s fault that the consumer abuses the “LOAN” system and further more are unable to pay it back. Every company has to run a business to survive. I’m not promoting anything but I’m being a realist with regards to a business. It works the same way as renting a car. It’s a ridiculous price. Rent a car every week and by the end of the year you have purchased the car. Should law makers regulate Budget or Enterprise? No one really thinks of it that way because most “car renters” actually have the money to pay and they haven’t boycott or complain to the BBB or attorney general with regards to the excessive cost of renting a vehicle.
I say payday lenders should use CSO model to process payday loans in states where law makers have added a voice.
do you know of a good CSO attorney in texas??