Tales from the Payday Loan Trenches

A guy I know, we’ll call him Bob, opened a payday loan store roughly 3 years ago in a state having decent payday loan legislation in place. Now at the time, Bob knew doodly-squat about a payday loan business! His brother in-law had mentioned the fact that he had to go down to the local payday loan store and make a payment on his loan.

Bob decided to tag along with his brother-in-law. Needless to say, my friend Bob was blown away by what he saw! A 450 square foot office with 6 customers waitng to either get a loan or make a payment.

Bob did his research and opened his first location. Roughly a year and a half later, he opened a second in the same town.

So… today, Bob calls me. He wants to “run some numbers by me.” I say, “Sure Bob, go ahead. I’ll give you my 2 cents worth.”

Bob’s two stores are “netting $50,000 a month before taxes.” He’s got a default rate of less than 3%. (Bob’s a little maniacal. He visits his late payers at their home! 3 years on the job are required to qualify for a loan from him.)

Bob asks me, “Are my numbers good?”

“Are they good?”, I say! “Damn%^&* they’re good!”

Bob’s so deep in the trenches running his biz he’s got no idea! He wants to know how he compares with his payday loan brethren! When he called me he admitted he was behind the counter in his store!

Bob’s not going to the CFSA Convention. Bob’s never been to a FISCA Convention. He’s never heard of OLA. Bob’s running his payday loan biz and making good money doing it. $50,000 a month net before taxes! With 2 stores and a 3rd on the way!! In 3 years!!!

Sometimes I get so wrapped up in MY DEALS (Sovereign Nation Model, Offshore Model, smart phone aps, call centers, lead providers, consulting… ) I forget what it’s like to actually run a store. It’s been a while!

My point with this is that it’s still doable. There are guys like my friend Bob who are doing their research, entering the biz and making great money!

Bob just needed a little positive feedback! He’s so damn busy running and building his business he’s not able to sniff the air. He doesn’t have time to network or find out what’s the latest and greatest new widget/strategy/solution.

Bob’s just patiently plugging away making MONEY! Bob’s like hundreds of other payday loan, car title lenders and check cashers. They’re staying under the radar and building wealth! AND working HARD!

Bob, all I can say is, “You’re doing great! Now back to work!”

And Bob, keep up with the industry by reading my ramblings :o)

PS: Yeah, I know. The consumer protectionists and the legislators are gonna jump all over this! They’re going to say Bob is making too much $$ or charging too high a fee to his customers. Like Bob told me, “Tell them it’s guys like me whose taxes and licensing fees pay their salaries.” Tell them, “My customers are just glad I’m here for them when they need me.” And finally ask them, “How many actual payday loan customers complained about me or the industry?”

And yes, I did make up the “brother-in-law” part of this story. But the numbers are reported EXACTLY!

Comments? Thoughts? Attacks? Ideas?


Comments ( 1 )
  • Leslie12 says:

    Great story! I was about to open my small payday biz, but got really worried about defaults. Collections are really not my favorite activity. What are some average numbers on defaults?

Leave A Comment

Your email address will not be published. Required fields are marked *