Over! The Days of Beating Up Payday Loan Customers!
One ringy dingy. Two ringy dingys. Three… “Trihouse Payday Loan Consulting. This is Jer.”
The caller blurts out, “I owe a payday loan company $500. I want to pay them but I can’t all at once. I’ve tried to reason with them but they just won’t listen. What should I do, Jer.? Do I close my bank account? Call my state Attorney General? Maybe call my local newspaper? What can I do?”
I, being the sophisticated, experienced, and knowledgeable payday loan consultant that I am, responded to the caller with, “Are you $%^^^&&&&& kidding me! You’re trying to make a deal? And they won’t make one with you?”
“That’s right Mr. Jer.
“What’s your name?” I ask.
“It’s Donna ZXXXXX. I’m in South Carolina.”
“Alright, Donna. Have you talked to a Manager? Have you made the payday loan company an offer, Donna?”
“Mr. Jer, every time I contact them, the person I talk to says management does not make deals. I owe the money and they want it. Mr. Jer, I don’t have it all now. I know I owe the money and I want to pay off my debt but my family just doesn’t have it.”
“Donna, what did you need the original $500 loan for?” I ask.
“Well, our 1998 Honda needed a new radiator. It’s the only transportation our family has. My husband and I need it to get to our jobs. We were too embarrassed to ask for a loan from our relatives; they didn’t really have the money to lend us anyway. We have one credit card but it’s maxed out.” Donna starts trailing off… she’s crying.
“OK, Donna, calm down. I’ll try to help,” I say. “Tell me a little more. Have you paid any of it back yet?”
“Not really,” says Donna. “Every two weeks the payday loan company has deducted $87.50 for the past ten weeks. When I call the payday loan company they say I still owe $500.”
“Alright, Donna. If my math skills are correct, you’ve paid the payday loan company $437.50 ($17.50 per $100 X 5 x 5 two week pay periods) in fees and you still owe the $500 principal. Donna, how much can you afford to pay them until this loan is paid off?”
“My husband and I figure $50 every two weeks,” says Donna.
“Donna, give me the payday loan company’s phone number and I’ll try. We’ll do a conference call with the 3 of us.”
One ringy dingy. Two ringy dings. Three ringy…
“XXX Cash Advances. This is Emmett, may I help you?”
“Hello, Emmett. This is Jer with Trihouse Payday Loan Consulting. My friend Donna ZXXXXX is on the phone with us. Say hello Donna. (Donna says hello.) Donna owes you $500. She needs a payment plan both you and her family can live with. Emmett, as you can see from Donna’s records there on your computer, she has paid your payday loan company $437.50 in loan fees so far. We propose you prepare an ACH authorization and implement a payment plan of $50 every two weeks for 10 pay periods until the principal of $500 is paid in full. That’s a total payment to your company of $937.50.”
“Why should we accept your proposal, Jer?” says Emmett.
“Well, Emmett. Let me count the ways…”
“First, it makes good business sense! In the long run, you’ll retain a good customer and gain access to her friends and family via her referrals and testimonials. Emmett, you and I both know the key to success in the payday loan industry is customer retention.”
“And, ultimately over a 25 week period, you will have received $937.50 in fees and principal, Emmett.”
“You’ll have implemented FISCA, CFSA and OLA best practices. This is THE trend in our industry. And Emmett, you certainly don’t want your industry peers beating you up at the next payday loan industry convention, do you?” (I always find a little humor helps in these situations :o)
“Emmett, you and your company will avoid coming to the attention of the media, the regulators and the so-called Center for Irresponsible Lending.” (Ok, I can’t help it. Technically, it’s the Center for Responsible Lending.)
“If you’re licensed in South Carolina Emmett, you’ve already exceeded the maximum allowable rollovers and you MUST offer a payment plan to Donna.” (Note to reader: with the right payday loan software, this is very simple.)
“And most importantly Emmett, you’ll feel good about yourself and your payday loan company.”
“OK, Jer and Donna. Let me talk to management…,” says Emmett.
Now, READER, it’s too soon to know what Emmett and his payday loan company decided to do for Donna and her family. And, I don’t know if Donna or her husband will attempt to get 5 more payday loans next week. (Of course, if she does attempt this, and the payday loan companies she applies at use any of the top “scrubbers” – that is sub-prime consumer data reporting services – Donna will have trouble qualifying for a new payday loan.)
Note also READER, the best payday loan software offers the ability to implement a payment plan with fixed amounts deducted to coincide with consumer payroll periods or to create creative pay down plans depending on the specific payday loan consumer situation.
(Don’t worry READER, I’ll continue to cover LMS (payday loan software), sub-prime consumer databases, payment plans, Best Practices, collections, lead generation and MUCH more in future Newsletters and Blog Posts.)
Bottom line READER? Think LONG TERM. Employ Payday Loan Industry Best Practices. Feel good about yourself and your business! Remember, you’re providing emergency loans to consumers having no place to turn. Without you, they lack the ability to keep the lights on, fix the car, buy their kid’s prescription…
And dear READER, if this strategy of “soft-collections” doesn’t make sense to you, YOU and YOUR COMPANY ARE DOOMED! YOU WILL NOT ENDURE!! There are simply too many sophisticated, well-funded groups in the payday loan space who “get this.” Believe me, I know! I get calls and consult for them every day!
Finally, whether you’re a “brick-n-mortar” or an Internet Lender employing one of the creative payday loan licensing models such as Sovereign-Tribal Nation, offshore, choice-of-law, Credit Services Organization (CSO), line-of-credit, installment lending, OR WHATEVER, DO NOT THINK you can beat-up your customers. BE ADVISED! YOU WILL DIE!!
WHAT DO YOU THINK READER? Attack me, call me nuts, fight with me or LOVE me. Comments and altered thinking are welcome!
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