Category: Trends & Tactics

09
Apr

From the Heart: How One Cash Advance Lender Saved My Family

The Importance of Cash Advances for Individuals with Poor Credit

The Struggle for Access to Credit

If you have poor credit, you understand the struggle of finding access to credit in times of financial emergency. Banks and credit unions are often unwilling to lend money to individuals with less-than-perfect credit scores, leaving them with few options in the face of sudden expenses or bills. In situations like these, cash advances can be a lifesaver.

The Benefits of Cash Advances

Cash advances provide individuals with quick access to small amounts of money, which can be essential for keeping the lights on, paying medical bills, or fixing a car in order to keep a job. While they are often more expensive than traditional loans, they offer a way for those who are struggling financially to bridge the gap and avoid more serious financial consequences.

A Customer's Perspective

As a customer of a cash advance lender, I have experienced firsthand the benefits of these loans. While I understand that they can be expensive, I am truly grateful that they are available when I need them. When unexpected expenses arise, such as car repairs or medical bills, I know that I can turn to my lender for assistance.

Why Cash Advances Matter

For individuals with poor credit, cash advances can be the only option available in times of financial emergency. Without access to these loans, many people would be left with no way to address sudden expenses or bills, which can have serious consequences for their financial well-being.

Transparency and Education

One of the things that I appreciate about my cash advance lender is their commitment to transparency and education. They have been upfront with me about the costs associated with these loans and have worked to ensure that I understand the terms and conditions of each loan that I have taken out.

Advocating for Access to Credit

As my lender prepares to appear before a House financial subcommittee in Washington D.C., I feel compelled to speak out in support of their services. I hope that lawmakers will understand the important role that cash advance lenders play in providing access to credit for those who are struggling to make ends meet.

Conclusion

In conclusion, cash advances are a valuable resource for individuals with poor credit who are facing financial emergencies. While they are more expensive than traditional loans, they offer a lifeline for those who would otherwise be left with few options. It is important for lawmakers to understand the vital role that cash advance lenders play in providing access to credit for those in need.

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

Immediate delivery to your Inbox!

Are you interested in starting a profitable payday loan business, or taking your existing business to the next level? Our comprehensive course is designed to give you the knowledge and skills you need to succeed in this lucrative industry. From developing a business plan and securing funding, to implementing effective marketing strategies and managing risk and compliance, our expert instructors will guide you through every step of the process. With our course, you’ll gain the confidence and expertise to build a successful payday loan business and achieve your financial goals. Get our Course today and start your journey to success in the payday loan industry!

100% Money Back Guarantee: How to Start a Consumer Loan Business
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20
Mar

Strategies for Launching a Consumer Loan Business

Introduction:

How to Launch a payday loan, installment loan, or car title loan business.

Starting a consumer loan business is a profitable venture, but it requires a lot of planning and strategizing. Launching a successful consumer loan business requires that you understand the market, have a business plan and have a solid marketing strategy.

In this blog post, we will discuss some strategies for launching a consumer loan business that can help you achieve success both online and via a storefront.

Understanding the Consumer Loan Market

The first step to launching a successful subprime consumer loan business is understanding the market.

Subprime consumer loans are a highly competitive industry, and to succeed, you need to conduct thorough market research.

Start by analyzing your competitors and understanding their target market, their lending requirements, and the loan products they offer.

Creating a Business Plan

A business plan is a blueprint for the success of your consumer loan business.

It should include your company’s mission, vision, business goals, market analysis, financial projections, and marketing strategy.

A well-written business plan can help you secure financing and investors for your business.

Obtaining Licenses and Permits

Consumer loan businesses require certain licenses and permits to operate legally.

Before launching your business, you need to research the licenses and permits required in your state or province.

These requirements vary depending on your location, so it’s essential to research the regulations that apply to your business.

Setting up Operations & Infrastructure

Setting up operations and infrastructure is crucial for launching a successful consumer loan business.

You need to invest in technology, such as loan management software, to manage loan applications, underwriting, and loan servicing.

Additionally, you need to hire staff with expertise in underwriting, credit analysis, and customer service.

Developing a Marketing Strategy

To attract subprime customers and build your brand, you need to develop a marketing strategy.

Your marketing strategy should include a website, social media presence, and advertising campaigns.

You should also consider partnering with other businesses in your community and attending networking events to build relationships with potential customers and referral sources.

Conclusion:

Starting a consumer loan business requires careful planning and execution.

By understanding the market, creating a business plan, obtaining licenses and permits, setting up operations and infrastructure, and developing a marketing strategy, you can increase your chances of success.

Launching a consumer loan business can be challenging, but with the right strategies in place, you can build a profitable and successful business.

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

Immediate delivery to your Inbox!

With our Course, you’ll gain the confidence and expertise to build a successful consumer loan business and achieve your financial goals.

Get our Course today and start your journey to success in the payday loan industry!

Are you interested in starting a profitable consumer loan business that offers payday loans, installment loans, car title loans…

Or taking your existing business to the next level?

Our comprehensive Course is designed to give you the knowledge and skills you need to succeed in this lucrative industry.

From developing a business plan and securing funding to implementing effective marketing strategies and managing risk and compliance, our expert instructors will guide you through every step of the process.

100% Money Back Guarantee: How to Start a Consumer Loan Business
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06
Sep

Payday Loan Lenders Ban Cell Phones?

Can a payday loan lender ban cell phones in their stores, call centers, and workspaces?


As challenging as it is to hire, train and retain employees for payday loan, car title loan, and installment loan centers, employers must proceed with caution before banning cell phones in their workplace.

https://PaydayLoanIndustryBlog.com

I advise my clients to evaluate their business model [online vs. storefront vs. blended] and the culture they’ve created within their business.

Outright cellphone bans may severely harm your consumer loan business!

There is a perception that cellphone use in the workplace negatively impacts employee productivity, privacy, and security. In many consumer loan companies we consult for, this is the case.


STEP 1

Before implementing a policy banning all cell phones, install cameras in your common areas. Post signs disclosing that cameras exist. Make 100% certain that all employees know that cellphone use is prohibited while the employee is “on the clock.”


Step 2

Monitor your employees via the cameras. Are they neglecting their work? Are they on their phones while “on your clock?”


Step 3

Yes? Here’s the law.

The Fair Labor Standards Act defines an employer’s hourly paid employee activity rights. This includes cellphone use by employees while being paid by an employer.  

“An employer may legally specify items an employee can bring into a work area. Employers can ban a multitude of items, including a gun, jewelry, a computer, an iPad, a TV… No law prohibits employers from banning cellphone use or possession during work or in a shared work area.”

The National Labor Relations Board addressed the right of employers to ban cell phones in the workplace in 2020.

Cott Beverages implemented a cellphone policy that allowed employees to use cell phones in non-working areas and breakrooms while banning their use in workspaces. The NLRB upheld this Cott Beverages policy. 


Bottom Line?

If your employees continue using their cellphones for personal use while you’re paying them, an outright ban is legal and a no-brainer. Still, I recommend you begin by installing cameras, creating a written policy, and communicating your policy before using a hammer to solve the cellphone issue. 


Need help starting or improving your consumer loan business?

Schedule a call with our Founder, Jer Ayles, here: Clarity.fm 

 

Or grab a copy of our 500+ page Manual: “How to Start a Consumer Loan Business

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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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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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