THE BLOG

22
Jan

How to Launch a Payday Loan Business

Starting a payday loan business?

A car title loan company?

Prefer to call them installment loans or line-of-credit loans?

You’re a money lender! But are you a Loan Shark?

Or, you’re thinking about the business of lending.

Here’s a real world example of a title loan we made. All data is real except the customer’s name.

Customer Name: Jose Jones
Amount of Loan Principal: $1500.00
Collateral: 2005 Toyota Camry XLE Sedan with 121,000 miles. “Good Condition” KBB.com.
Our Fee: 12%/month

Jose has paid us a total of $3420 in fees. [$180/month for 19 months.]

How much does Jose owe us today? $1500.

Now remember, Jose’s credit card was maxed.

Jose had no friends or family to loan him the money. [Actually, I think he was too embarrassed to ask…]

No bank or credit union would loan him $1500 in under 30 minutes…

We funded his loan and let him continue to drive his car.

Jose COULD have added a little every month to pay down the loan principal. He has not.

Are we loan sharks?

Are we financial counselors?

Do we get money to loan from the FED’s at <3% like the banks?

Should we simply tell him enough! Thank you. Here is your title?

What about the other 21.7% of our customers we have to chase?

Should we continue to earn a good profit and give a portion to our local charity?

Do you think we should put Jose on a payment plan?

Our competition charges as much as 30%/month on the loan principal.

Do we just keep Jose on the hook? We all know eventually Jose’s Toyota will break down and then what?

As several of my readers pointed out:

  • Banks do not give their customers a break!
  • Credit Unions show no mercy
  • Credit card companies destroy ALL who fail to live up to their agreement
  • NSF Fees can crush a consumer. 1800%+ APR’s!!!!!!!!!

WHAT WOULD YOU DO?   PLEASE TELL ME: Jer@PaydayLoanIndustryBlog.com

REMEMBER!

Our customers have jobs. Our customers… READ MORE BELOW

have bank accounts. Our customers have the ability to pay back their loan! Our customer is the Walmart customer; the blue-collar, white-collar employee making $18,000 to $64,000 a year!

And MOST IMPORTANTLY what we all need to understand is that this segment is GROWING!

There is a world-wide shift occurring in the advanced economies!

The total number of employees in the service sector and other lower paying jobs is expanding.

Higher skilled, higher paying jobs are going off-shore to developing countries where wages are lower. This shift is so pronounced there is even a name for this market segment; it’s ALICE (Asset Limited Income Constrained Employed).

These are our people! Embrace them!!

Loan Shark: Noun INFORMAL•DEROGATORY
A moneylender who charges extremely high rates of interest, typically under illegal conditions. Loan Shark: Urban Dictionary Definition
Jer Trihouse 702-208-6736 Cell
Knowledge Store: Tribe & State-by-State Licensing Models
http://www.PaydayLoanIndustryBlog.com

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17
Jan

Mississippi Financial Service Centers: Short Term Lending Industry Resource

Financial Service Centers of Mississippi Lenders Association.

Are you a Lender? Are you operating in Mississippi?

Yes? Then you MUST join the Financial Service Centers of Mississippi association!

Support your local association! This is a NO BRAINER! 

The Team over at the Mississippi Assoc. have launched a new website AND have new events on the calandar.

From their new website, “The association is dedicated to offering information and tools to its members, so members are able to serve their customers in a fair, ethical, and helpful way. If you need information on Mississippi’s short-term lending industry, this is a good place to start. We keep our members well informed about upcoming legislative actions and other news events. We offer members the opportunity to meet and share ideas, find ways to be better at what we do and stay on top of issues that concern industry.”

They go on to write, “In today’s uneasy regulatory climate, it is important for business owners in this industry to stay informed. FSCM offers the opportunity to network together so members can not only be informed about important issues, but to be recognized as a large —and needed— financial industry in this state. This association holds an annual conference and a yearly membership meeting, which also offers the opportunity to meet your legislators and members of the Mississippi Department of Banking and Consumer Finance.”

So… head on over to Financial Service Centers of Mississippi website, check out the upcomimg events, become a member and SUPPORT  the “Business of Lending Money to the Masses” industry!

Mississippi payday loans, title loans, installment loans

MISSISSIPPI FINANCIAL SERVICE CENTERS

 

 

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10
Dec

Tip #6: How to Sell Your Payday Loan Business

10,000 “Baby Boomers” turn 65 years old every single day!

I know, based on the calls and emails I receive every day, several of these “Boomers” own payday, car title and installment loan businesses they want to sell.

Why sell? Retirement, divorce, tired, start another business, personal need for cash, partnership problems, key employee quit, want to move to Texas/Florida/Arizona…

And what’s the #1 problem I see when I evaluate one of these “consumer loan businesses?”

The seller has failed to prepare their consumer lending business to be sold! You can’t just wake up one morning and decide to sell your payday loan business, your car title loan store, your consumer lending company…

So, what to do? A concrete step a seller can do today? [NOTE: This Tip is an excerpt from our “How to Loan Money to the Masses Profitably – The Bible.”]

  • Make the decision today that you want/need to prepare your business to be sold 2 years from today. [Even, if it’s unlikely you WILL want to sell, your goal must be to PREPARE your business for sale!]
  • Don’t ever issue equity to retain your key employees! It makes a sale of your business too complicated! Use a “Stay Bonus.” A “Stay Bonus” is a cash reward paid to your key employee(s) as a reward for staying with your consumer loan business through the sales transition to the new buyer.
    • Often, the buyer needs somebody who knows the business, the customers, the loan management system… and can keep the business running after the seller departs.
    • I’ve been involved in the purchase and sale of a LOT of payday loan & consumer lending businesses over the years. Many of these businesses are purchased by absentee owners. OFTEN, they absolutely insist the seller’s key employee(s) must remain after their purchase. So… how does the seller guarantee this will happen?
    • Basically, as you prepare your consumer loan business for sale down the road, you create a long-term cash reward program for your key employee(s).
    • IN A NUTSHELL: you set aside a cash amount equivalent to your key employee’s annual bonus in an account specifically targeted for each employee you want to remain on board through a sale. Allow your key employee to withdraw 1/3 of this account’s balance each year AFTER a 3 year waiting period!
    • Why is this important? If your key employee walks away from your company, they must make the decision to walk away from a SIGNIFICANT AMOUNT OF CASH AS WELL.
    • What else? When selling your company, at some point you’ll have to disclose this to your key employee. When you’re “selling” your key employee on your plan to sell your consumer loan company, you can “top up” the balance in the special “Stay Bonus” account you setup on their behalf.
    • Why this is important? Your key employee is richly rewarded for HELPING YOU SELL YOUR BUSINESS, to remain with your company and the new buyer and to make certain the sale of your business is successful FOR ALL PARTIES! WIN-WIN!

For more ideas, strategies and tactics for “How to Lend Money to the Masses Profitably,” get a copy of our newly updated “Bible” downloaded to your Inbox within 30 seconds: CLICK HERE TO GET YOUR COPY IMMEDIATELY.

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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04
Dec

Operation Choke Point: The Saga Continues & Dept. Heads at Dept. of Justice, FDIC & OCC SHOULD Roll!

This in from American Banker:

By: Dennis Shaul CFSA

“The small-dollar lending industry has long known that government bureaucrats with a partisan agenda were determined to bring the industry to its knees, but this illegal campaign went farther than anyone could have imagined — with those at the very highest levels of the Department of Justice, FDIC and Office of the Comptroller of the Currency targeting customers of regulated banks based on their personal bias.”

“Government officials abused their power to press forward with their own ideological agenda. Then, faced with a demand for accountability, they denied wrongdoing and sought to cover up their misdeeds. This is not a small-dollar lending story; this is a story of government agencies debasing their missions through the abuse of power.”

“Fortunately, the Community Financial Services Association, which I run, could afford the cost of a lawsuit and seek redress in the courts. CFSA was an original party to the lawsuit brought against the government and we participated in the preparation leading up to its filing in 2014. Our reasons for pursing a legal challenge to the actions of the FDIC and OCC were simple. First, we were seeking justice for our members who were harmed. Second, we were convinced there was a deliberate pattern of terminations of banking relationships that we wanted to bring to light. Third, if there was indeed a pattern, we’d be rendering a genuine public service by establishing the principle that no agency or group of people within an agency should be allowed to abuse their authority by exercising it in an unlawful or prejudicial manner. “

Here’s a link to the Full American Banker opinion piece by Dennis Shaul: Original

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21
Nov

The Future of Lending to the Masses

By: Jer-Trihouse. At this year’s NJ Tech Council FinTech Conference, held in September in Jersey City, Ron Suber, president emeritus and senior adviser at Prosper (San Francisco), a FinTech lending startup, spoke about the future of FinTech and the opportunities for startups getting into the area now.

Here are  just a couple of the points he made:

  • This is now the “Big Bang” moment in artificial intelligence (AI). “We see State Street and other banks buying AI companies because they want to take all those people in the call center and turn them into bots, using alternative information and intelligence.”
  • Startups have an opportunity in FinTech because the customer is evolving. Much as Spotify killed Apple Music and Pandora, startups can get in there and disrupt. People in their ’20s want something different. In response, capital markets are changing, data is changing. “It’s your job to understand all the pressure points.”
  • If you are running an innovative FinTech company and raising funds, you will not only have to explain what you will do with the money, but also how you’ll be able to deal with the pressure created by this next generation. Remember, the children of traditional customers don’t even enter banks, except to get a roll of quarters.
If you’re a brick & mortar lender, your future is dim. Same day funding is here. Your borrower’s phone will continue to be their 1st choice as a conduit to getting MONEY into their account or on their card. Your demographic is dying. I’m not saying your store will close tomorrow BUT you must begin to address this reality TODAY and focus on building the skill sets required to succeed as a lender in this new reality.
Need help with this? Selling? Buying? Reach out! DISCREET is my middle name: Jer at Trihouse Consulting
Thanks for being a loyal email subscriber. We appreciate hearing from you. Let us know if you ever have any questions.
EAT A LOT OF TURKEY, cranberries, cornbread… and enjoy your FAMILY! Unfathomable opportunities abound and time is precious! We’re THE LUCKIEST people to have lived on Planet earth! Enjoy the RIDE!!
Jer Trihouse 702-208-6736 Cell
Knowledge Store: Tribe & State-by-State Licensing Models
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