Tag: payday loan


2009 Payday Loans, Car Title Loans & Pawn Shop Resolution

Like most prognosticators, we expect 2009 to be a very tough year for jobs. Unemployment will certainly increase; 10% or higher wouldn’t surprise us.

But, like they say, where disaster lurks opportunity reveals itself IF you’re a “glass half full” kinda fellow.

So, in the payday loan, car title loan, rapid tax refunds, and pawn shop industries expect 2009 to experience increased demand for our products followed by a focus on collection activities.

After all, it doesn’t help much if your customers clamor for your products but are unable to pay you back in a timely manner.

Remember, it’s “all about the job”. Construction, retail and service jobs are at risk in most geographic locations. Are you up to date on what’s going on in your community? Do you know which companies are laying off and which ones are growing?

As I write this I’m in Clarksville, TN. I’ve been visiting with family and meeting with clients in car title lending and payday loans. I picked up a local newspaper and on the front page is an article about a $1.2 billion dollar polycarbonate factory coming to town. 1000 construction jobs until the factory is scheduled for completion in 2012. Then 500 manufacturing jobs will result with an estimated 8 more related jobs for every 1 factory job created by this project.

And yet, many of the small business men I’ve spoken to here are unaware of this development. You can bet the manager of the TitleMax store knows about it. In fact I went over and met with him. It wasn’t long before we began to discuss it’s implications on his business.

The point? Resolve in 2009 to always know what’s going on in your community. Join at least on of the local business organizations. Read your local paper every day. Join a charitable group.

Get involved! You’ll be glad you did. Not only will you profit but more importantly you’ll feel better!!



Payday Loan Strategies, Tactics & Trends

Everyone wants to know what’s going on in the payday loan industry. What are the latest trends? What’s the newest strategy? How do my defaults compare with every one else and how do I improve? Heck, for that matter how does everyone else even measure or define defaults?

One method of gaining additional insight that we’ve always recommended is to listen in on the earnings calls of the publicly traded companies. By listening in or reading the transcripts, you gain valuable insight into trends, profits or losses, and strategies to enable you to run your business better and manage your investments.

A great example of what you can learn was recently provided by the 4th Quarter earnings report by EZCORP, Inc. Joe Rotunda, President & CEO, reported, “This quarter marks our twenty-fifth consecutive quarter of compounded growth in earnings. It’s also the eighth consecutive fiscal year of earnings growth. I believe this amplifies the strong dynamics within our business. When one component is adversely impacted by an external factor primarily associated with economic conditions, another strengthens and vice versa. This is true both between and within the business segments”.

If you read the transcript, Joe is referring to the ability of EZCORP Inc. to benefit from offering multiple products and services in their stores. Now all their products are focused on sub-prime financial services; pawn, payday loans, auto title loans, gold buying , etc. But the beauty of offering multiple products rather than taking the mono-line approach is that as the economy changes and evolves you always have a spectrum of products that make sense for consumers.

Joe goes on, “For our fourth quarter, we are reporting net income of $16 million. That’s an increase of 44% over last year. Diluted earnings per share were $0.37 compares favorably to $0.26 last year. If you adjust for two unusual elements, which you will be hearing about, the drag of Hurricane Ike …”

Looks like the industry, based on EZCORP Inc., is experiencing record income and phenomenal growth.

Later in the call Joe says, “From a bad debt perspective, we’ve done an excellent job of managing initial defaults through balanced underwriting and an intense focus on getting the customer into the store on the day their loan is due. For this quarter, and as for the year our initial defaults show improvements to last year. However, our net bad debt still increased at a faster rate than fees and we ended the period at 36% of fees versus 31% last year. Without Hurricane Ike, bad debt would have been within three points of a year ago. The increase, I believe, reflects the difficulty in the current economic environment to collect debt once it’s incurred. It shows what the consumer behaves once they default and it shows in the capital markets that buy bad debt as well. So, regardless, we are committed to continue to address process to improve both”.

So, just as we have been harping on, defaults and collections are becoming more of an issue and demand close attention. That’s a trend you need to be aware of. No surprise here but HOW DO YOU DO IT?

Next, Joe discusses some new products EZCORP Inc. has introduced. “Moving from new stores to new products, we have expanded our installment loan to 90 stores in Texas. We’ve been cautious with the product because of the size of the loans, from $1525 to $3000, and the length of the term, which is at five months. We believe we have a pretty good handle on the customer, bad debt management, and we plan to expand the installment loan to several additional states beyond Texas during the New Year.

We also recently began offering another new product, auto title loans. We introduced this product last month in all 11 stores in Missouri. We believe this product offers us an incredible opportunity to leverage our store base and drive incremental returns. It also affords us the opportunity to expand our customer base and to diversify our product assortment beyond solely the payday loan product. Our plans are to move judiciously and expand the auto title loan product to additional three to five states and approximately 100 additional stores by the end of the year”.

And finally, “We are doing installment loans today in Texas and we are doing them under the CSO statutes. We’ve developed the loans so it’s a five-month period, which is as far out as we want to go and the pricing to the customer is approximately 10% of the principal of the loan paid every – twice a month as they go through the period. The rate, if you calculate an APR on it, the APR is somewhat lower for an installment loan than it is for a typical or a traditional payday loan.

Now, rather than go on-and-on dissecting this conference call, we suggest you head over to:

EZCORP 4th Quarter Conference call at SeekingAlpha.com
and read it.

And don’t stop there! Get access to those companies you want to follow and listen in on the calls or read the transcripts. Typically, you can do a search, click on Investor Relations and receive an email when a call is scheduled.

There’s some great stuff buried in there you just have to harvest it.

Comments? Suggestions? Let’s hear it!


Payday Loans – The Media – Common Sense

The media never entertains the idea that the payday loan product can do any good despite the fact that consumers by the millions use them! Every media treatment is focused on the negative; the few in our industry, like all industries, that do harm our reputations.

So, it’s nice to happen upon a news rant that average folks chose to comment on. And even nicer to find a couple of common sense responses by consumers lacking an ax to grind!!

Here’s a novel idea from Jeffrey over at: Arizona Star

“Kind of an easy target. Since these places are successful a lot of people must use their services. Why has no reporter ever interviewed people for whom the Payday Loan places were helpful? What will these customers do now if they need a few hundred bucks to tide them over? Will you loan it to them?”

And Michael adds this, “It is good these politicians want to do away with the Payday lenders because they would probably never need them. These make a good target with out doing much work and the pols get their name in the press.

Jeffrey has it right, interview the people that use them. What are their needs?
When I was in the service every ship had their “payday lenders” 3 for 5 and they made the twice a month payday stretch.

Pawn shops are no different, when you pawn an object their success depends on you not paying it off in the 30 day period and they sell it at some value much greater than the pawn ticket was worth.”

It appears to me the average American citizen has the common sense our politicians, self-serving consumer protectionists, and our competitors (bankers, credit card companies and credit unions) lack!

What do you think? Does the average consumer get us?


Payday Loans – Ohio Update

The payday loan initiative scheduled to be voted on in the November ballot is at risk of being left off the ballot.

Secretary of State Jennifer Brunner said she’ll appoint a hearing officer to decide if consultants hired to collect signatures to place the measure on the ballot properly filed the petitions.

Gov. Ted Strickland in June signed a law restricting the annual percentage rate that lenders can charge to 28 percent, and limit the number of loans customers can take to four per year.

The payday loan industry managed to collect 422,000 petition signatures to place their initiative on the November ballot.The ballot measure needs 241,000 signatures from at least 44 of Ohio’s 88 counties to qualify.

The payday loan measure will repeal the cap on interest, allowing lenders to charge roughly 400% APR’s depending on the term of the payday advance.

Parties supervising the collection of ballot signatures must file a Form 5 with Ohio that lists the names and addresses of signature gatherers and the names of their employers. Brunner’s office can’t seem to find evidence the form was filed by Arno Political Consultants, a California firm hired to collect a portion of its signatures.

This failure could result in having the payday loan measure deleted from the ballot.

Sec. of State Brunner will decide Sept. 25 whether to accept the signatures and allow the referendum to be placed on the ballot.


Average Folks Question Banning Payday Loans

Sometimes we forget just what a payday loan means to a family that experiences a temporary financial setback and has no where to turn for help.

I am a single father of three children. I have had a career in the aviation field since serving 7 years in the U.S. Navy. I make mid 40’s for yearly income. Then I pay my monthly bills and there is no more room for anything else. There have been several times that these payday advance businesses have saved me from a grim financial time. In this position, I haven’t got family, friends to rely on and have to resort to “survival of the fittest.” When a check is returned at my bank, it is the equivelant charge of getting a payday loan of $250 (the fee would be $37 vs. a $35 fee from my bank.) Granted, of course there is a loan involved but the money was used for food, gas etc.

Why is it in the interest of our local state gov. to forbid this? I have spoken to people that are well off with money and everyone of them have agreed that these loans should be terminated, the business should be put under as if they are loan sharks. I have never been late on payment so I wouldn’t know…

Go BuckeyeStateBlog.com here to read the entire article as written by average folks using payday loans to solve temporary problems.