Tag: payday loans

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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15
Apr

PAYDAY LOANS-OBAMA FIGHTS BACK ON CUTTING CFPB FUNDING

The payday loan-small dollar credit industry continues to fight the good fight. However, an administration source was quoted as saying: “On Wednesday, House Republicans are looking to sneak an amendment into HR 1195 that would cut CFPB funding. To be clear, any attempt to limit funding at the CFPB is an obvious effort to weaken the important consumer protections put in place following the financial crisis.”

“In the Dodd-Frank Act, Congress took important steps to promote accountability by the CFPB, such as by constraining its funding more than for any other bank supervisor. The CFPB is the first dedicated financial regulator looking out for consumers and protecting them from deceptive and unfair practices. We cannot allow this dedicated watchdog to have its resources limited in this way.”

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11
Mar

Texas: Guns, Payday Loans, CABS-CSO’s, 3rd Party Lenders and Car Title Lending in Texas

Jer Trihouse Payday Loan ConsultingThe state of Texas has long held a reputation for personal freedom, low taxes, and minding one’s own business. Texas attorney Greg Abbot recently ran this ad in The New York Times, “Wanted: Law abiding New York gun owners looking for lower taxes and greater opportunity.”

The Facebook landing page reads, “We have right to work laws and a reasonable regulatory environment. Texas has created more than 275,000 jobs in the last year alone! And we’ll fight like hell to protect your rights. You’ll also get to keep more of what you earn and use some of that extra money to buy more ammo.”

So, all appears well in Texas. Except Atty General Abbot has not managed to enlighten Texas Senator John Carona regarding the “reasonable regulatory environment” nor the “jobs” theme!

SB 1247, introduced by Senator Carona is perhaps the most draconian, job killing, consumer coddling, Texas legislation in a long, long time.

(As you read this, remember that the state of Texas already has strong small dollar loan consumer protection legislation in place!)

In a nutshell, here is SB 1247:

*18 pages of gobbly-gook. No consumer, business operator, regulator or court will have a clue as to how 80% of this bill is, or will be be, interpreted and enforced. No small business person in their right mind will risk the fines and compliance burden SB 1247 would implement. That being said, uncertainty will drive Texas entrepreneurs and consumer small dollar loan choices underground or out of existence.

*A consumer may only have 1 loan out with a CAB. What the…! How does this work? Does the Senator plan to block all access to the Internet? China, North Korea and Iran cannot even achieve this. Internet lending transaction volume is growing 30% per year. Why so slow :o) Because in 30+ states, borrowers can still get a loan from their local business man. You know, that business woman who leases office space, employs Texans; Texans who pay taxes, buy McDonald’s burgers, purchase homes and rent apartments.

Will the Senator setup road blocks at all the Texas state-lines and search all vehicles for payday and car title loan contracts?

We all know the Senator’s ultimate, longer-term strategy is to employ a state data base as implemented in Florida, Oklahoma, etc. Based on real world evidence, state data bases are not the panacea they were once thought to be. You want a $500 loan? Grab your phone, enter “Austin payday loan,” click the link, fill out the application and the $500 will be in your account in the morning. (Hell, with today’s technology, a borrower can pull this off on a Sunday and spend the $$ Sunday afternoon!)

Alternative finance services (AFS) products including installment loans, line-of-credit loans, payday loans, car title loans, a loan on your Rolex… are all accessable from a Lender in another state, another country, an indian tribe in the U.S./Canada, or a store you can walk into.

I could go on but read the bill for yourself over at CreditAccessBusiness.com ! (A great Texas resource I might add :o)

Simply said, draconian legislation is not the answer to solving the financial challenges 20 million consumers faced last year when they chose – “voted” – for access to payday loan styled products. AFS Lenders WANT THEIR MONEY BACK. They will not loan their hard-earned capital to borrowers unable or unwilling to pay it back or in states that make it too tough to collect their money. (Funny thing: One experiment “suggested payday loan borrowers who received an interest-free loan were as likely to take out successive loans as those who paid the normal interest and fees.” –Fusaro and Cirill 2011)

Witness the recent introduction of safe-harbor payday loan legislation in North Carolina, PA… Why? Because the legislators of these states, and others, recognize their constituents insist on using AFS products to solve their financial challenges. Consumers need AFS products and demand access to them. A Bertrand and Morse Study (2011)  conceded that “loans maybe fairly priced and that many borrowers are fully informed, capable and simply face a pressing need for cash at a moment when they lack other, cheaper forms of financial aid.”

You want AFS fees paid by consumers to decrease? Make legislative compliance easier to comprehend and allow competition in the marketplace. (I’ve got a New York Federal Reserve paper to prove this theory as well – Donald Morgan: Defining & Detecting Predatory Lending)

ENOUGH for now :o) Jer Trihouse Consulting  702-208-6736

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17
Jan

Payday Loan and Car Title Pledge Loans: Unintended Consequences of Access to Credit

There is a strong argument for advising regulators to avoid restricting consumer access to credit alternatives. A piece written by Todd Zywicki and Robert Sarvis  at Mercatus.org does a good job of championing a multitude of financial products including car title “pledge” loans and payday loans. Here’s a portion:

“Well-intentioned legislators and regulators assume that restricting particular forms of credit will lead to fewer bad financial outcomes. But this is misguided and can lead to worse, not better, outcomes. Restrictions on particular types of consumer credit don’t necessarily induce consumers to refrain from unnecessary purchases or to avoid bad out- comes. Consumers resort to these financing options because they have pressing needs. So repressing one form of consumer credit will often only lead to a shift to other new or existing forms of consumer credit offered on less favorable terms for consumers. Restrictions on payday lenders might simply turn them into title lenders, as they seek to make up for caps on fees and interest rates by demanding collateral to reduce losses in the event of default, or push consumers to online payday lenders, which often charge higher rates than brick-and-mortar payday lenders. The ad hoc regulatory program of restricting disapproved forms of consumer credit thus has a whack-a- mole nature to it; limiting one form simply spawns a new one that avoids existing regulations.”

Read the entire article here: http://mercatus.org/publication/pitfalls-regulating-consumer-credit

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21
Mar

Jer Ayles-Ayler Trihouse on the Road with Payday Loans & More

Sorry everyone! I’ve been “on the road” the past MANY days. It started with the annual CFSA Payday Loan Convention in Hollywood, Florida. Then, I visited clients in Miami, Orlando, Key West (Thanks Steve! That was FUN!), Atlanta, Nashville, Clarksville and finally the 25th Annual Reservation Economic Summit (RES 2011) & American Indian Business Trade Fair in Las Vegas.

Man, The Sovereign Nation payday loan model is HOT! After that Wall Street Journal article, a lot of Tribe’s are wondering, “Why aren’t we doing this?” Looks like more will be…

The Payday Loan Offshore Model is making more and more sense as well. More than few significant players are entering this space.

I’ve got a LOT of comments and insight in AFS (payday loans, check cashing, currency exchange, money transfer, car title loans, tax refunds…) products and services coming so stay tuned!

Jer@PaydayLoanIndustryBlog.com

702-889-9555

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