Tag: banks

22
Sep

U.S. Bank Simple Loan vs Payday Loan

The CFPB has compared bank & credit union overdraft [NSF] fees to a short-term styled payday loan products with a 17,000% APR!”

According to Pew a bipartisan – in our opinion – “research association” –  12 million people a year take payday loans. If borrowers can’t make the payment, they often pay more fees to renew the loan. Payday borrowers, Pew found, spend an average of $520 in fees to repeatedly borrow $375.”

Yes, and a taxi costs $4800 from New York City to Los Angeles. BUT WHO WOULD DO THAT?

Here’s a letter from a consumer who wrote Consumer’s Union:

I am a single mother who works two jobs, is working on my masters and doesn’t receive child support. My family network is from Mexico, so we don’t have a lot of money. I am doing all of this on my own. My bank cashes the largest item first and deliberately causes my checking account to overdraft so they can charge me more in overdraft fees. The most recent situation was when my rent check was sent to be cashed a month after it was written. I had several small debit transactions out for less than $5. Had those debit transactions been paid first, I would have avoided all NSF fees as I most likely would have only been over by a few cents if anything. Instead, the bank cashed the check first and automatically imposed a NSF fee causing several other of the smaller debits to overdraw. So, now I am paying over $100 for being less than $20 over. All this does is keep me from being able to pay my other bills and put food on the table for my son. Without these fees, I would be able to save some money so I could avoid this from happening, but I can’t. It makes my stomach hurt knowing that I am simply being punished for being poor, when I desperately need help.

US BANK  Launches New Loan Product

“U.S. Bank’s new loans cost $12 for each $100 borrowed, when payments are automatically debited from a customer’s account. The fee is $15 per $100 if a customer opts out of automatic payments.”

Florida payday loans are currently $10 per $100 borrowed.

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!

California payday loan fees are $15 per $100 borrowed.

I could go on…

U.S. Bank Simple Loans are “between $100 and $1,000, are meant to help customers deal with unexpected expenses, like a car repair or a medical bill.”

Gee whiz! So are payday loans!

“U.S. Bank and several other institutions, including Wells Fargo and Regions Bank, for a time offered  “deposit advance loans,” which were costly and had to be repaid in a lump sum when the customer’s next paycheck was deposited. Banks abandoned the loans after regulators clamped down on them in 2013.”

Well sort of. Actually, banks and credit unions make MUCH MORE money via Non-Sufficient Funds Fees [NSF’s] then they ever could with these “deposit advance loans.” The DAL’s were simply for public consumption; PR. Nothing more.

“Overdraft fees are a real money-maker for banks. According to the Wall Street Journal, overdraft revenue is up 2.5% to $33 billion since 2015. Overall, in 2016, the top 10 biggest banks made $7.5 billion. These fees are costly for consumers. The Consumer Financial Protection Bureau (CFPB) has compared overdraft to a short-term loan with a 17,000% APR!”

U.S. Bank Simple Loan
Simple Loan FAQs

On a $400 loan, the fee would be $48, which equates to an annual interest rate of about 71 percent.

Where can I apply for a Simple Loan?
Log in to Online or Mobile Banking and access the Simple Loan application in your checking account dashboard.

How do I set up direct deposits to my checking account?
Download the U.S. Bank Direct Deposit Authorization Form (PDF).
Provide your U.S. Bank deposit account type (checking or savings), account number and routing number, and other required information.
Submit the completed direct deposit form.

When is the first payment due on my Simple Loan?
Your first payment will be due at least 30 days after the date you complete your loan. The next two monthly payments will be due on the same date each month.

Note: Your first payment due date will not fall on the 29th, 30th or 31st.

How do I make payments?
If you choose automatic payments, the minimum due on your Simple Loan will be automatically deducted from your checking account on the day it is due.

To make manual payments you can visit a branch, call us at 800.872.2657, mail a check to the address on your statement, or log in to Online and Mobile Banking and transfer money from a U.S. Bank account or an account you hold at another financial institution.

Can I pay off my Simple Loan early?
You can pay down your loan faster by paying more than the minimum due, but doing so will not reduce the total amount or fees that you owe. There is no pre-payment penalty for paying the loan off early.

Will I incur any fees if I miss a payment or make a late payment?
There are no missed payment fees, non-sufficient funds fees, or late payment fees on a Simple Loan.

When will the money be deposited into my checking account?
After your loan is approved and booked, you can access funds immediately. Please note: funds deposited to your account after 8 p.m. CT will be available for withdrawal, but will not post to your account until the next business day.

What if I need less than $100?
Simple Loan has a minimum of $100 and maximum of $1,000. For an amount less than $100 a Reserve Line or credit card may be right for you.

When can I apply for another Simple Loan?
You can apply for another Simple Loan after 30 days has passed since you’ve paid off your previous Simple Loan.

Are alternative, small dollar lenders concerned about the banks? NOPE!

Payday loan, car title loan, installment loan, line-of-credit lenders… JUST WANT A LEVEL PLAYING FIELD.

Banks must enable any legal business to have a bank account.

Banks & Credit Unions must disclose fees CLEARLY.

Credit Unions should pay taxes.

Then, bring on the competition. Allow consumers to choose the loan product that meets their needs.

Banks & Credit Unions are big, fat and slow. Are you a lender? Don’t worry about competition from these behemoths! Have you been into one lately?

You want into the “business of lending money to the masses?” Get started here: Click to Launch a Consumer Loan Business!

How to Start a Consumer Loan Business: Installment Loans, Car Title Loans, Payday Loans, Consumer Loans

How to Start a Consumer Loan Business

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03
Feb

Bank Accounts: Lenders, Check Cashers

Bank Accounts for Payday Loan, Installment Loans, Small Dollar Loans, Consumers…

The CFPB issued a “policy directive” suggesting banks and credit unions do more for consumers lacking bank accounts. This is a laudatory action. Those of us offering payday loans, installment loans, car title loans, line-of-credit, check cashing… know well how difficult this negative situation makes a consumer’s life.

BUT WHAT ABOUT SMALL BUSINESSES! How about bank accounts for lenders, check cashers, gun shops…? Who the hell creates ALL the jobs for these consumers in need of a bank account?

By now, we’re all aware of the devastation the small dollar loan industry has experienced as a result of “Operation Choke Point.” [Here’s a list of ALL the industries attacked by Operation Choke Point.] And everyone knows it wasn’t us who nearly brought down the financial system and then asked for bailouts from taxpayers.

So what’s up with Richard Cordray, head of the CFPB. Why not help consumers by helping all the small businesses who experienced “bank discontinuance?”

Senseless!

Here’s the CFPB’s opening salvo letter to banks and credit unions with a link to the entire letter from Richard Cordray:

February 3, 2016
[Address of financial institution]
Dear [CEO of financial institution]:

I am writing to you and your peers, as leading executives in the banking industry, to bring an important matter to your attention. This letter is not being sent in reference to any sort of regulatory requirement, but instead is simply a suggestion that I urge you to consider in serving your customers.

As you know, each year millions of Americans open new checking accounts, making them one of our most widespread financial products. Right now, much of the industry presents consumers with a binary result – either an applicant passes a standard screening process to obtain an account after identifying any credit risks posed by the applicant’s history of misuse or mishandling of some prior account, or the applicant is blocked from accessing the banking system altogether.

payday loan car title loan banks and consultingThere is, however, a third possibility, which is to offer all applicants a lower-risk account (whether a checking account or a prepaid account) whereby the applicant cannot pose the same level of risk to the institution. Accordingly, the same applicant need not be screened out of the banking system by applying the same risk thresholds that are used to determine eligibility for a standard checking account. Millennials, in particular, seem to be expressing great interest in the availability of such lower-risk products.

This is important because an estimated ten million American households are currently “unbanked.” You know very well that having a checking account or a reloadable prepaid account enables… Here’s the link.

Need help starting or improving your lending business? Reach out to Trihouse Consulting. We’re lenders, operators, consultants and more. Selling your business? Buying a small dollar loan business? Want to learn more? Jer@TrihouseConsulting.com 702-208-6736

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27
Jan

Magic Numbers Don’t be misled by payday loan statistics.

Magic NumbersDon’t be misled by payday-loan statistics.

This is an interesting article by Thomas Sowell at the National Review.

It’s a good read! Mr. Sowell begins … “Words are not the only things that enable political rhetoric to magically transform reality. Numbers can be used just as creatively — and many voters are even more gullible about statistics than they are about words, apparently because statistics seem more objective.

The latest congressional crusade is to clamp down on small finance companies that provide “payday loans” and check-cashing services in many low-income neighborhoods, where there are few banks.”

He goes on… “A common practice in making small loans of a few hundred dollars for a few weeks is to charge about $15 per hundred dollars lent. Politicians, the media, community activists, and miscellaneous other busybodies are able to transform these numbers into annual percentage charges of several hundred percent, thereby creating moral melodramas and demands that the government “do something” about such “abuses.”

Read the article in its entirety here: National REview.com

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