Category: Uncategorized

15
Mar

Unlock the Secret to 300% Loan Portfolio Growth with One Simple Referral Strategy!

To develop a successful referral program for lenders aiming to expand their loan portfolios among subprime borrowers, it’s essential to craft creative and appealing strategies that resonate with both online and storefront channels.

Drawing inspiration from the provided documents and incorporating successful practices from other industries, here’s a list of innovative referral program ideas:

1. Digital Wallet Credits: For each successful referral, offer credits or cashbacks directly in the customer’s digital wallet. This method ensures instant gratification and encourages continuous engagement.

2. Tiered Referral Bonuses: Implement a tiered system where the value of rewards increases with the number of successful referrals. For example, the first referral could earn $50, the second $75, and so on, incentivizing customers to refer more.

3. Loan Discount Programs: Provide discounts on the interest rates for future loans for both the referrer and the referred customer. This could be a percentage off the next loan’s interest or a fixed dollar amount reduction.

4. Exclusive Membership Clubs: Create a VIP or membership club for customers who bring in a certain number of referrals. Membership can offer perks such as lower interest rates, higher loan amounts, or access to financial advice services.

5. Community Contribution Initiatives: Link referral bonuses to contributions towards community projects or charitable causes, showing a commitment to social responsibility. Customers can choose the project their referral bonus supports, adding a personal touch.

6. Gamified Referral Challenges: Introduce a gamification element by setting up challenges or contests around referrals. For example, the person with the most referrals over a month wins a significant cash prize or a valuable non-cash reward like a tech gadget.

7. Celebration Events for Top Referrers: Host exclusive events for top referrers, such as dinners or financial planning workshops, to recognize and celebrate their contributions to the lender’s growth.

8. Loan Forgiveness Draws: For every referral, the customer gains an entry into a draw where they could win loan forgiveness for a certain percentage of their loan.

9. Referral Leaderboards: Publish leaderboards in customer portals or newsletters, highlighting top referrers. This could spark competitive spirit and social proof, encouraging more referrals.

10. Special Offers for First-Time Borrowers: Just as seen in the Cottonwood Financial example, provide a special discount or offer for the first loan of new customers who come in through a referral source.

 

11. Referral Tracking Dashboard: Develop an online dashboard where customers can track their referrals, see their rewards, and access promotional materials to share with friends and family.

12. Cross-Promotion Bonuses: Partner with other businesses to offer cross-promotion bonuses. For example, refer a friend to both the lending service and a partner insurance company and receive a bonus for both.

13. Emergency Fund Top-Up: For customers who refer others, offer to top up their emergency fund (a small, interest-free loan) as a reward, reinforcing the lender’s role in helping manage financial emergencies.

By blending these innovative ideas with insights from the provided documents [Included in our “bible”], lenders can create a referral program that not only attracts new customers but also fosters a loyal customer base willing to advocate for their services.

Are you ready to catapult your lending business into a realm of unprecedented growth and profitability?

Dive deep into the heart of the subprime market, where vast opportunities await those daring enough to explore.

Our exclusive Consumer Referral Program is just the tip of the iceberg. 🚀

Unlock a treasure trove of ingenious strategies, expert insights, and untold secrets with our comprehensive guide.

Whether you’re operating online or running a bustling storefront, learn how to lend to the subprime market both profitably and safely.

From creating a magnetic referral program that turns customers into your most passionate advocates to navigating the complexities of the subprime landscape with finesse, our guide is your key to unlocking success.

Don’t let this opportunity slip through your fingers!

Join a community of forward-thinking lenders who are reshaping the future of the subprime lending industry.

Click THIS to access more groundbreaking ideas and to master everything you need to know about thriving in the subprime market.

Transform your approach, elevate your business, and leave the competition in the dust.

The time is now—seize the moment and redefine what’s possible in the world of lending. 💼💥

👉 Click THIS to begin your journey towards becoming a leader in subprime lending.
Let’s create a legacy of success, together.

4-WAYS I CAN HELP YOU!

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08
Feb

2024: Texas CAB Loan Business Stats

“37% of Texas consumers said they could not cover a $400 emergency with current savings.”

[This stat varies depending on who paid for the study and their agenda, the specific state, etc.]  

[Excerpts from the 2023 Texas OCCC, which regulates payday loans, car title loans, Texas CABs… Link at bottom]

In Texas, small consumer loan originations (342-F) have declined 30% since 2019.

Regulatory tightening lending standards, as lending costs rise, could also limit the availability of small-dollar loans.

Three of the most common credit products offered by licensees of the OCCC are motor vehicle retail installment sales, small installment consumer loans, and large installment consumer loans.

These products have rate ceilings and fee limitations and generally cannot pass on market increases to borrowers.

When the cost of borrowed funds (evidenced by the federal funds rate) and operating expenses (inflation) increase, lenders must make decisions as loans become less profitable.

Economic theory and consumer lending studies point to credit rationing or lower availability, especially to riskier borrowers, when market rates approach rate ceilings. (Vandenbrink, 1982) (Garon, Braga, Oglesby-Neal, & Martire, 2023)

Lending Volumes Non-real estate loans account for most consumer loans (Installment Loans, Pawn Loans, and Payday/Title Loans).

OCCC licensed lenders and financial service providers profiled in this report made 12,310,0003 loans for $10.8 billion in 2022.

This number does not reflect the number of borrowers as they may take out several loans during a year by refinancing a loan or receiving multiple loans throughout the year.

Texas Credit Access Businesses (Payday and Title Loans) Chapter 393

Overview

Credit access businesses (CABs) obtain credit for a consumer from an independent third-party lender in the form of a deferred presentment transaction or a motor vehicle title loan, more commonly referred to as “payday loans” or “title loans.”

 In Texas, the actual third-party lender is not licensed; the credit access business that serves as the broker is the licensee in this regulated industry.

Credit access businesses charge a fee to the consumer for obtaining a third-party loan.

Fees are usually calculated as a percentage of the loan amount, either paid at the loan’s inception or accrued daily while the loan is outstanding.

All payments are made directly to the CAB, and the borrower will generally not have direct contact with the lender.

The CAB provides the borrower with a check for the proceeds issued from the lender’s account.

Borrowers can obtain these loans in high-traffic areas and increasingly online.

Type of Customer

Payday loan customers need an active bank account, and lenders will advance money to the consumer based on the expectation that money is regularly deposited in that bank account.

Title loan customers must have an unencumbered motor vehicle title to offer as security.

Both types of customers could have average to poor credit scores and choose these loans for convenience or eligibility reasons.

Typical Rates

The majority of the loan cost is not capped.

Fees charged to borrowers by the CAB typically depend on the amount of the loan and the length of the term.

CAB agreement terms are limited to 180 days or less. The entire loan may be due in a matter of days, or the loan may be due over several equal payments.

Refinancing or renewing payday and title loans is very common and can add to the cost.

Texas CAB Loan Business

Default Borrowers utilizing title loans risk losing their motor vehicle to the lender or the CAB.

The loan is usually guaranteed by the CAB, and the borrower will be pursued for the deficiency balance.

Creditors may file suit against the borrower for non-payment, and some may report the repayment history to consumer reporting agencies.

A borrower may also face attorney fees, repossession fees, and court costs added to the loan balance.

The prevalence of motor vehicle repossessions in the CAB industry is reported by quarter and has typically totaled 8,000 to 12,000.

However, total repossessions in Q1 2020 peaked at about 13,100. This number fell significantly in Q2 2020 as creditors worked with borrowers at the height of the coronavirus pandemic.

Many people lost their jobs; however, federal stimulus and loan forbearance played a large role in limiting Q2 repossessions.

Since the beginning of the pandemic, total repossessions have fluctuated from quarter to quarter, and repossessions as a percent of active title loans have continued to remain higher than historical norms.

Since borrowers may obtain multiple loans throughout the year, the repossession rate reflects the likeliness on a transaction basis, not a borrower basis.

Texas Car Title Loans

Alternatives Payday and title loan borrowers generally pay a high rate for their credit and may run into eligibility issues with other products.

Possible alternatives are pawn loans, small installment loans, employer loans, or other competitive small-dollar loan products sometimes offered by credit unions or nonprofit organizations.

Data Limitations

The reported loans made have decreased in this industry since 2019, and factors specific to industry are likely a more significant cause than the COVID pandemic.

CABs are a specific subset of a broader classification of businesses registered as Credit Service Organizations (CSOs) with the Texas Secretary of State.

In 2019, the Attorney General of Texas opined that CSOs that are not CABs can still arrange extensions of credit for consumers so long as they are not deferred presentment transactions12 or motor vehicle title loans. (Attorney General of Texas, 2019)

CSOs that are not CABs might not: (1) obtain OCCC licenses, (2) receive OCCC compliance exams, and (3) report transaction data to the OCCC.

Additionally, the transaction has evolved from a predominantly single-payment loan with multiple renewals to one installment loan with the term and renewal equivalent to multiple loans.

Credit Access Business (CAB) Annual Data Report, CY 2022

The summary below represents aggregated statewide annual data reported by credit access businesses (CABs) as of 3/15/2023.

The OCCC reviewed the data for reasonableness.

The OCCC continues to receive amended or corrected data submissions, and periodic revisions are published when significant.

The OCCC will request verification from the licensee of any data found to be questionable or unreasonable.

Title 7, Section 83.5001 of the Texas Administrative Code requires CABs to file annual data reports with the Office of Consumer Credit Commissioner (OCCC) identifying loan activity associated with:

  • single and installment deferred presentment (payday) loans, and
  • single and installment auto title loans.

Data Limitations

Data provided by reporting CABs reflects location-level activity for the identified year.

Each licensed location is treated as an individual reporting unit. If data was compiled from individual customers, it could produce different results.

The data presented in the following summary represents CAB submissions via electronic and manual reporting (including any corrected data) of annual activity as of March 15, 2023.

Emergency or Unexpected Credit – Purpose and Amount

Since 2013, the Federal Reserve has conducted surveys on the likelihood that an American adult could pay for an unexpected $400 expense with cash or its equivalents.

In 2021, a record high number (68%) reported they could cover the expense with cash or its equivalents. However, a year later, the survey found consumers were doing noticeably worse, with only 63% reporting they could cover a $400 expense and 18% saying the most significant expense they could cover was less than $100 with current savings. (Board of Governors of the Federal Reserve System)

Lending Club Corporation, in partnership with PYMTS conducted a similar survey and concluded that the static $400 metric used by the Federal Reserve was not relevant for the types of expenses consumers face today. (PYMNTS and LendingClub Collaboration, 2022)

Their survey found that the average emergency expense is roughly $1,400, with car repairs being the most common.

Subprime Consumer Loan Business

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Installment Loan Comparisons – Examples of Pricing and Restrictions

The OCCC licenses four types of installment loans a consumer might turn to in the case of an unexpected $1,000 – $2000 expense.

Payday Loan Consumer Loan Business

15 CAB APR is estimated from fees reported to the OCCC in 2023 Q2 Data reports. 16 10 U.S. Code §987 restricts loan terms to members of the military, including an “all-in” APR limit of 36%. Not all 342-E loans are eligible, but are the most likely option.

Emerging Products and Innovation

The OCCC is monitoring several emerging financial products.

These products contain possible benefits and expanded access to customers but also possess some regulatory uncertainty.

If the products or providers don’t perform, then the customer risks having few options for corrective assistance.

A 2023 Government Accountability Office (GAO) report highlighted several innovative products marketed to underserved and unbanked populations.

The report highlighted potential benefits such as lower costs and increased access compared to alternatives such as payday loans.

Highlighted risks include a lack of full transparency related to product fees and features.

Additional risks to banking partners (an integral source upon which many innovative products rely) are due to fair lending concerns, lack of FDIC insurance for fintech deposit accounts, 3rd party fraud, and anti-money laundering compliance.

Payday Loan Car Title Loan Digital Business Startup

Link to Texas OCCC Report Ending 12/2023: https://geni.us/TexasOCCC2023

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03
Feb

URGENT: CFPB’s Rule Could Be a Death Knell for Your Lending Operations – Act Now!

The proposed rule by the Consumer Financial Protection Bureau (CFPB) to prohibit financial institutions from charging nonsufficient funds (NSF) fees on instantaneously declined transactions presents specific challenges for subprime consumer lenders and their customers.

[Here’s a link to CFPB]

Let’s delve into these challenges by breaking down the rule’s implications and focusing on its difficulties for those dealing with subprime, credit-challenged consumers.

Impact on Subprime Consumer Lenders

Increased Operational Costs 

Subprime lenders, who often operate on thin margins due to the higher risk associated with their customer base, might face increased operational costs. Implementing the technology and processes needed to comply with the new rule could be costly, particularly for smaller lenders who may not have the resources of larger institutions.

Adapting to Regulation:

This regulatory change requires lenders to reassess their fee structures and revenue models.

Since NSF fees represent a source of income that compensates for the risk lenders take on, finding alternative revenue sources without disadvantaging consumers or violating other regulations could be challenging.

Technology and Compliance Pressure:

Keeping up with the technological requirements to ensure transactions are instantaneously processed and accurately reported will place additional pressure on lenders.

This is particularly problematic for lenders who rely on older systems or who may not have the infrastructure to support real-time transaction analysis.

Impact on Subprime Consumers

Access to Credit:

If subprime lenders find the new regulations too burdensome or costly, they may tighten their lending criteria further or increase the cost of credit to offset the loss of fee revenue.

This could make it more difficult for subprime consumers, already facing limited access to credit, to secure loans.

Unintended Consequences:

While the rule aims to protect consumers from unexpected fees, it might lead to unintended consequences.

Lenders could introduce new fees or increase existing charges elsewhere to compensate for the lost revenue from NSF fees.

Subprime consumers, who are more sensitive to fee increases and additional costs, could end up paying more overall.

Consumer Education and Awareness

The rule’s focus on instant transaction declines also highlights the importance of consumer education.

Subprime consumers need to understand how their transactions are processed and the potential for new types of fees or changes in lending practices.

Without proper education and transparency, consumers may not fully benefit from the protections the rule intends to provide.

Conclusion

The CFPB’s proposed rule to stop banks and lenders from charging NSF fees on instantly declined transactions presents notable challenges for subprime lenders and their customers.

While aiming to protect consumers from unfair fees, the rule could inadvertently tighten credit access for subprime consumers and increase operational burdens on lenders.

These challenges underscore the need for a careful balance between consumer protection and the operational realities of providing credit to high-risk consumer segments.

Stakeholders, including subprime lenders, should engage actively in the rulemaking process to ensure that the rule’s implementation considers the unique needs and challenges of the subprime lending market and its consumers.

4-WAYS I CAN HELP YOU!

Grab a copy of our “bible:” Learn More

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Free Bi-Monthly Newsletter: Learn More

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Lenders, do you want to learn more about collaborating with a Native American Indian tribe?

 

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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!

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19
Jan

How to Make Serious Money lending to the Masses

How to start a payday loan business, consumer loans, installment loans car title loans

To be successful as a lender –or in any other entrepreneurial endeavor –you only have to be good at a few things:

  • Picking the right business niche
  • Raising money
  • Hiring good people
  • Ability to iterate through your challenges
  • Be Bold.

Go where others fear to tread.

Let’s get real!

Lending money to the masses can be very profitable! You can get CRUSHED as well.

The average U.S. worker is paid $23/hour. In real terms, $23/hour has the same purchasing power as $6/hour 40 years ago. The result? Staggering household debt! We are rapidly becoming a nation of “haves” and “have-nots.”

Many of you are reading this as you sit in Australia, Europe, the Islands, the USA, and China…

It’s the same theme everywhere.

In the USA, for example, 50% of U.S. residents are living paycheck to paycheck! [CareerBuilder.com]

One in three people are subprime borrowers.[<620 Credit Score.]

Two in five U.S. adults do not have access to $400 cash immediately.

Not in a bank account, a credit card, or under the mattress. They’ve already borrowed from friends, family, their church… folks who are in the same boat!

Nowhere to turn but to YOU!

What’s this mean to you?

OPPORTUNITY!

My Team will teach you how to loan money to the masses without getting your butt handed back to you.

How you ask?

  • Free “Discovery Calls.”
  • Our famous Course, “How to Start/Improve a Consumer Loan Business.”
  • Consulting. By the hour, a retainer, equity… Let’s talk.

Yes, for many of you, reading our Course will be PAINFUL! It’s the price for entry and success. I hear this “pain” daily. Everything we’ve learned building our own consumer-facing loan business is in the Course! 

The loan products discussed  are:

  • installment loans
  • payday loans
  • signature loans
  • car title loans
  • personal cash advances
  • Business-to-business loans…

All of them can be very profitable!

Why We Teach [Go Here]

Profits [More]

Real-world example? We’re charging $15 to $30+ for every subprime 14-day loan we make in California and Texas. [Depends on the state licensing model or the Native American Tribe we collaborate with.]

That’s a 400%+ annual percentage rate (APR) for a borrower to use our money for two weeks. 

Imagine having a loan portfolio of $500K, $1MM, $5MM, $10MM+? 

It’s doable. Check out Enova. They reported that they loaned over $1 Billion dollars during their last 3 months earnings report! And they don’t even have 3% market share!!

Online lending? It’s here! Borrowers whip out their phone, fill out an application and are funded in <30 minutes! 

Inventory

A lender’s inventory is MONEY! It’s not tulips dying. It’s not rotting bananas. MONEY, MOOLAH, COIN, DINERO, SCRATCH, DOLLARS, EUROS…NICE!!DONE!

So, we’ve established that lending money to the masses can be very profitable!

Raising Money
This is a mindset. It’s about the presentation. Practice getting good at distilling your idea into a bite-sized amount.

Get your business launched. I’m not talking about immediately achieving scale. Just get your loan business open operating and fund a few loans. Storefront, Internet, monoline, combo… just fund a few loans!

Next?

Friends, family, peers, and members of your network… will find out what you’re doing. They will want to learn more. Don’t be shocked when they say, “I have $20K, $50K… sitting in the bank earning 1% per year before taxes and inflation. “Could you put my money to work in your new business?”

Of course, you can!

Offer them 6%, 8%, 10%+ per year. You can afford it when you’re grossing 500%+ APRs on your loan portfolio!

NOTE:
How am I calculating these APRs? Email me for my PDF calculations. TrihouseConsulting@gmail.com].

Hiring Good People
If you’re good at raising capital, you can hire people to do everything else.
You can hire a CEO.
You can hire a lawyer.
You can hire an experienced customer service representative.
You can buy “off-the-shelf” loan management software.
You can subscribe to a sub-prime consumer credit reporting service[CRA].
You can hire great people to do any part of this business.

YOU GET MY POINT!

To hire right, you need a giant funnel. You have to sift through a ton of leads. You need a system and an onboarding process. You’ve got to learn how to do this! [This intel is in our Course.Click Me]

The quality of your life is about the people around you.

Everything terrible that happened to you in the last ten years did not occur in a bubble.
Someone either DID or DID NOT do something to you.
That’s life.
Most problems in life are people problems.
We let the wrong –or right –people into our lives.
In business, there are some whack jobs! Don’t let them in!

Now go out, BE BAD and earn some SERIOUS MONEY!
Jer –TrihouseConsulting@gmail.com

500+ page Course: “How to Loan Money to the Masses Profitably.” Immediate PDF delivered to your Inbox.

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