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
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!
