Category: Trends & Tactics

10
Jul

Cordray & CFPB Ram New Arbitration Rule Down Our Necks!

Posted by / Trends & Tactics

Another play by Cordray and his future plan to run for governor. This rule will not stand! Bank, credit union and credit card companies will not allow the rogue CFPB and their appointed administrators ram this down our throats. It only benefits attorneys; not consumers.

The Consumer Financial Protection Bureau (CFPB) issued its final rule today on arbitration clauses, only a few days after Rep. Jeb Hensarling, Chairman of the House Financial Services Committee, threatened CFPB Director Richard Cordray with contempt charges if the rule were published. Totalling 775 pages, the new rule is intended to limit the ability of financial service providers to restrict class action lawsuits by consumers via arbitration provisions in contracts. Covered persons under the rule must submit arbitration and select court records to the CFPB.
Jer@TrihouseConsulting.com  – Trihouse Link to CFPB PDF Arb Rule

 

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07
Jul

Payday Loans vs Bank NSF and Overdraft Fees: Reported by CFPB

Posted by / Banking, Trends & Tactics

You think payday loan, installment loan and car title loan APR’s are high?

You want to know why banks, credit unions and so-called consumer advocates hate small dollar lenders?

Did you know the folks who initially funded the Center for Responsible Lending [CRL] launched a credit union – an entity treated as a non-profit?

Follow the money…

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

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

Check this out! The USA’s 628 biggest banks reported – after being forced to by the FFIEC – $11.2 BILLION dollars in NSF and overdraft fees in 2015. [2015 is the first year banks having assets exceeding $1B were required to report this number!]

$11.2 BILLION is 8% of these bank’s net income.

The median bank fee was $34.00. However, because of the way bank algorithms work, 25% of bank customers paid $90 per instance [2013].

Average payday loan APR? Just under 400%

The average bank NSF fee? 1400%

Now, realize that these banks have virtually ZERO RISK! They are at the front of the line. Their account holder; their customer – must pay the bank/credit union or they put their customer in the ChexSystem data base and close their customer’s bank account.

And, let’s not forget that the banks borrow their money from the FED’s for approximately 1%. THIS IS NUTS!

[Note: If you would like a copy of the original CFPB Report in PDF format, email: Jer@PaydayLoanUniversity.com ]

60 of the reporting banks derived 20% of their net revenue from overdraft and NSF fees!

  • So… installment, car title and payday lenders must raise capital at average rates of 1.5% to 3%+ per month; typically with personal guarantees.
  • Assume the risks associated with launching a new business.
  • Overcome the challenges the search engines place on them.
  • Face the continued negative pummeling brought down on them by their competition: banks and non-profit credit unions.
  • Approve loans for consumers with zero collateral.
  • Face-off the FED’s regarding Operation Choke Point – we did get a nice victory on this matter recently 🙂
  • Keep their loan portfolios on their books [balance sheet lending] vs securitization by the big boys.
  • And a host of additional B.S. that comes with the territory.
  • Banks and credit unions HATE US because we are cheaper!!

Now mind you, we are not whining! Just asking for a level playing field – never going to happen – AND the realization by all parties that payday loan, car title and installment loans make a GREAT DEAL of sense for millions of consumers EVERY YEAR!

 

 

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10
Jun

Payday Loan Operation Choke Point-Update

Posted by / Banking, Trends & Tactics

Operation Choke Point Lawsuit Update via Judge in District of Columbia.

Judge Kessler in the District of Columbia, denied a group of payday lenders allegedly affected by the Department of Justice’s (DOJ) controversial Operation Choke Point.

Banks for payday loan lenders.

Payday loan industry fails to demonstrate harm due to an inability to secure bank relationships.

“For example, the payday lender told the court that it received termination notices from 21 banks since 2013. But the company did not indicate how many banks it continues to have accounts or business relationships with leaving the court unable to conclude that they have been “cut off” from the system. ‘In sum, the fairest reading of Plaintiffs’ submissions is that, presently, they do have a right to hold bank accounts and otherwise access the banking system,’ the court wrote.”

Car title loan company

Start a PDL Business

The CFSA and additional payday loan plaintiffs requested the U.S. Court of Appeals for the D.C. Circuit to review their case.

Here’s a link to the “Opinion.”

Here’s a link to the original discussion appearing in JD Supra.

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25
May

Startup Opportunity with Experienced Tribe Lender

Posted by / Trends & Tactics

Opportunity: Synopsis of a proposed capital raise for a De Novo Tribe portfolio by an experienced payday loan/installment lender.

Proposal for Trihouse to Connect Operators and Capital Providers 2017

Goal:

Experienced Lender with capital is re-entering the small dollar subprime lending space and seeks additional capital to partner with in order to grow and scale the portfolio.

Lender is launching a new Tribal Lending Portfolio having a minimum starting capital of $4-$6M. Lender will contribute 10-20% of the capital into this deal depending on the final deal structure.

Should a capital provider prefer to employ a “state-by-state” licensing model, this Lender is “open” to this strategy. However, the capital required is at least 2x to be viable.

Additionally, this experienced Lender is open to managing a portfolio for a sovereign Native American Indian Tribe.

Background:

  • Lender has seven+ years of experience in underwriting, origination, and servicing loans focused on the underbanked, sub-prime consumer segments.
  • Lender manages the complete personal loan lending cycle from acquisition through payoff or collections.
  • Lender will manage all the day to day operations of this new portfolio.

Lender previously launched a $1M+ small dollar/sub-prime/installment portfolio and successfully exited by selling the portfolio to a larger group.

  • Lender has launched and serviced multiple online lending products (Merchant Cash Advance, Pre-Settlement Funding)
  • Lender worked on a team in the Prime Consumer Online Lending Space (Lending Club)
  • Previous Lender entrepreneurial ventures:
    • Started an online marketing company that specialized in online lead generation with in-house call center.
    • Lender’s first entrepreneurial venture was starting, and successfully merging, an accounting outsourcing company into a larger competitor
    • Lender started his career on Wall Street (Bear Stearns & others) as an institutional sales/trader.

Infrastructure in Place:

  • Lender to manage the entire operation
  • Director of Operations (who worked with Lender on previous portfolios
  • All Operations to be done in house (no outsourcing of call center)
  • Data analyst
  • LOI in place with a specific Tribe having a 5 year Term and a Pre-Negotiated 5 Year Renewal Option.

What Lender requires of a Partner:

  • Financial Partner who brings capital to the table. The capital will remain in the business for a 3-4 year period.
  • It is imperative the capital partner understands the lending business
  • Preferred method of capital monetization is a straight debt deal
  • Lender is open to a debt/Equity Hybrid

IF THIS OPPORTUNITY IS OF INTEREST TO YOU, EMAIL: TrihouseConsulting@gmail.com your complete contact info and interest. I will arrange a private introduction and then get out of the way. No cost to you!

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10
Apr

All About Internet Lending for Title, Payday and Personal Lenders

Posted by / Trends & Tactics

 Insight & Wisdom in small dollar lending. Digging down below the media headlines… Continued

How & Why PDL and Title Lenders Must Embrace the Internet.

Does your Team want to enter the lending space w/o the hassle of state-by-state licensing, bonding and compliance issues? “Tribe-in-a-Box” available immediately. Includes a sophisticated, well-funded tribe, ACH, push to credit card, LWS, website… Reach out to Jer@PaydayLoanIndustryBlog.com or 702-208-6736 for details. Borrowers by the millions are out there…

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.

And, let’s not kid ourselves! The Corona virus has put a serious dampner on face-to-face transactions. The future is DIGITAL! Those incumbants who dailed to embrace the Internet, the phone… a digital transition will go the way of the dinosaurs!

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.

Get on the Internet and start using Google, Bing, YouTube, Facebook, Instagram and Yahoo for installment, payday loan and car title loan research.

This topic is not over.  We are just getting started.
Comment? Questions? jer@PaydayLoanIndusytryBlog.com 702-208-6736

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PDF: 500+ Pages $150.00

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

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

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