THE BLOG

25
Sep

How to Calculate Installment & Payday Loan Annual Percentage Rate

Are you calculating the APR you charge your installment loan, car title loan and payday loan borrowers correctly?

Does your installment, payday and car title loan loan management software [LMS] correctly calculate the annual percentage rate (APR) on your loan contracts? I HIGHLY RECOMMEND you double check your APR calculations!

Here’s a free APR tool provided by the Office of the Comptroller of the Currency! Download it free here: APR Calculator

How to Claculate Loan APR: payday. installment & car title lenders

1: How to Claculate Loan APR: payday. installment & car title lenders

How to Claculate Loan APR: payday. installment & car title lenders

2: How to Claculate Loan APR: payday. installment & car title lenders

How to Claculate Loan APR: payday. installment & car title lenders

3: How to Claculate Loan APR: payday. installment & car title lenders

How to Claculate Loan APR: payday. installment & car title lenders

4: How to Claculate Loan APR: payday. installment & car title lenders

 

How to Claculate Loan APR: payday. installment & car title lenders

5: How to Claculate Loan APR: payday. installment & car title lenders

Get the facts. 400+ page “How to Start a Payday Loan, Car Title Loan or Installment Loan Business.”

We cover it all. Here’s a link to the Table of Contents. Link

How to Start a Loan Business

How to Start a Loan Business

13
Sep

Seed/Angel Funding with Tribe Lending Enterprise [TLE] & Experienced Servicer

The Opportunity:

Seed/Angel Funding with Tribe Lending Enterprise [TLE] & Experienced Servicer

A highly experienced Team of two founders & a TLE are launching a tribal online loan portfolio in the USA.

FOUNDERS’ DETAILS:

  • Founders’ contribute $1.1M cash to this launch
  • Founders’ contribute their lead aggregator company having generated 500K sub-prime consumer leads/month
  • This is not their first rodeo
  • U.S. based Team
  • Tribe lending model with a multi-pay installment loan product in 45 states.
  • Founder(s) previously successfully launched and exited tribe online loan portfolio
  • Founder(s) previously launched a highly successful online loan platform/portfolio in the most competitive, complicated state in the USA
  • Founder(s) previously serviced $20M sub-prime loan portfolio and 40K loans
  • Founders’ are family oriented – obligations, dependents, motivated, strong willed, driven, impeccable credentials… [I always favor these conditions when I   collaborate.]
  • Founders’ know their loan product KPI’s. Realistic. Experienced. Well versed in Cost per Funded Loan, First Time Defaults, Customer Acquisition Costs, Lead   metrics/costs…
  • Founders’ loan management software platform provides investors with 100% transparency hourly, daily, weekly, monthly… access to all accounting, reports…
  • In-house call center with highly experienced call center operations manager on Team
  • Tribe [TLE] Marketing/Servicing agreement in place with a large, sophisticated TLE – several $10M/$30M+ portfolios.
  • Supremely customer focused loan product offering financial literacy and credit building
  • ACH, bank accounts, CRA’s, EIN, lead generation… in place.
  • Founders have commissioned compliance officer, TLE employee(s), call center, accounting…

Investor(s)

  • Provide $3M to be deployed year 1
  • Interest rate for investors = 15% to 24% paid quarterly
  • 15%  to  50% equity to investors
  • Investor funds to be returned year 5
  • End of year 5, Investor return is $7.4M on $3M investment plus investor maintains their negotiated 15% – 50% equity in the enterprise.
  • OBVIOUSLY NO GUARANTEES:
    • Conservative performance estimates!
    • Year 3 = 80% return on loan portfolio
    • Year 4 = 100%
    • Year 5 = 125%
    • Year 5 Stabilize new investment money inflow = annuity of $750K/year

As they say, “Your results may differ.”

Exit strategy: maintain the portfolio as an “annuity” [estimated at $938K/year] or sell the loan portfolio for 2.2X.

NEXT STEP?
• Email your contact information to: TrihouseConsulting@Gmail.com
• Conference call(s)
• Meet the Founders
• Fall in love
• Nail down a Term Sheet.

Jer@TrihouseConsulting.com 702-208-6736 Cell
Knowledge Store: Tribe & State-by-State Licensing Models
http://www.AutomobilePawn.com Start a Title Loan Biz
http://www.PaydayLoanIndustryBlog.com
http://www.PaydayLoanUniversity.com/ Start a Loan Biz
http://www.eCheckSystem.com ACH, ICL, Debit/Credit card

08
Sep

CFPB vs Great Plains Lending & Plain Green: Tribe Payday Loans

Several years ago, before the Wall Street Journal reached out to me for my thoughts regarding tribal lending, I was having lunch in Newport Beach with a friend – I’ll call him Bob – who owned 61 brick-n-mortar payday loan stores in 4 states. As we were about to eat, I got a call from an investor requesting my help in partnering with a federally recognized Native American Tribe. The caller and I discussed the project briefly on the phone and I suggested I call her back later. I got off my phone and Bob went-off on me! He screamed and yelled something about all the years and money he had invested in securing state licensing and store leases and now these Indian tribes “are going to crush him!”

A few years have passed since this incident. Bob is still going strong BUT city ordinance and state licensing issues have caused him a LOT of grief. And Bob is like a LOT of operators in the payday loan space! He’s cunning, hard working and adaptive. Bob is still my friend  😎

Whatever role you play in the small dollar-payday-installment loan space, the Tribal online lending model has to be of interest to you.

Are Tribal Lending Enterprises (TLE’s) subject to the CID’s [civil investigative demands] issued by the CFPB?

Are Tribal lenders taking market share away from you?

Are your customers receiving direct mail offers from Tribes that compete with your state licensed loan business?

Are you a lead aggregator or lead generator selling leads to Tribal lenders?

Perhaps you’re a loan management software company with Tribal lender clients?

Seems to me about HALF my readers are ACH providers  😳 Most of you would not be too comfortable dealing with a CID.

Maybe you’re an investor, a lawyer, an SEO/SEM provider?

The Tribal online lending business model continues to impact the payday loan – installment loan industry in unimaginable ways! Tribes are making serious attempts to improve their economic situation while state licensed lenders fight them tooth and nail. (Disclosure: I have my feet – read MONEY – at work in both camps.)

You may think it’s easy for a Tribe to simply form a TLE and start lending via the Internet. WRONG! It requires MONEY and KNOWLEDGE. The majority of Indian Country is located in some far off, forgotten hinterland with zero access to capital and operational skills. Not many Tribal members receive a stipend from a successful Casino. Tribes face monumental barriers to entry.

So… down below here, is a PDF for your enjoyment.

Whatever role you play, you should sit back on a warm, dry Sunday morning and review this “PETITION FOR A WRIT OF CERTIORARI by NEAL KUMAR KATYAL (Counsel of Record)

In The Supreme Court of the United States
_________
GREAT PLAINS LENDING, LLC,
and PLAIN GREEN, LLC,
Petitioners,
v.
CONSUMER FINANCIAL PROTECTION BUREAU,
Respondent. 

71-8-cert_petition

And if you need superior counsel or advice regarding how to make money by lending money, reach out to me: Jer@TrihouseConsulting.com

Payday, Small Business & Installment Loan Biz

Payday, Small Business & Installment Loan Biz

 

07
Sep

Serious Trouble for a PDL_Lead_Aggregator Again: Tribal Sovereign Model Attacked?

Major Payday Loan Lead Aggregator in Trouble Again

CONSUMER FINANCIAL PROTECTION BUREAU TAKES ACTION AGAINST ZERO PARALLEL FOR STEERING CONSUMERS TOWARD BAD DEALS
Bureau Orders Zero Parallel and Its Owner to Pay $350,000 and Stop Their Abusive Practices

[Again, thanks for being a loyal subscriber! Send thoughts, comments, questions to: Jer Trihouse]

1st they were T3Leads.

Now, they’re Zero Parallel

Our industry simply cannot tolerate “cowboys.” On the other hand, the CFPB made charges against Zero Parallel for:

There is no need to “play” on the fringes! DISCLOSE EVERYTHING and stay out of trouble! The millions of consumers and small businesses reaching out for MONEY are not shopping rates. They simply want a fast, easy, PRIVATE transaction.

 

So, the big, bad CFPB with their unlimited budget focuses on Zero Parallel! Why? Because of Item #17 above? Could this really be an attack on the tribe sovereign model? Is it cheaper for Zero Parallel to simply payoff the government hacks at the CFPB rather than enlist expensive legal help? Shouldn’t the tribe payday loan association get involved? In an effort to protect their interests? Perhaps Allen Parker over at Consultants4Tribes.com will share his take on this!

 

Zero Parallel admitted to no wrongdoing. And I have not been in contact with Davit lately regarding this CFPB matter. But, I do know what happened to Blue Global; another lead generator/aggregator! $110M fine… bankruptcy…

 

PayPal invested in Lendup. Lendup funds small dollar loans to consumers. Why fund Lendup? PalPal continues to look for ways to make money. They decided that credit and lending is the way to make serious money!

 

Enova lends nearly $300M per quarter in small dollar loans.

 

Uplift, a very new lender founded by the guy who was thrown out of Lending Club, already initiated $1B dollars in small dollar loans.

 

Prodigy Finance: Raised $240M in equity and debt. They’re a student online lender. They focus on students paying $40K year to go to school. Borrow $$ against their future earning/career. Prodigy has $40M in equity and $200M in debt financing available.

 

I can name another 100+ lenders that continue to earn inordinate profits and raise millions by lending small dollar loans of $300 to $1000 and more to “average” consumers throughout the world.

 

So why do a few knuckleheads in our lending vertical DO STUPID STUFF? There is no need. Lenders can DISCLOSE EVERYTHING and still make money!

 

I can tell you there are several VERY SMART, EXPERIENCED small dollar loan operators – entrepreneurs having SERIOUS operations experience – ready, willing and able to take on these inefficient behemoths and achieve SERIOUS ROI’s for their investors. I’m talking about hybrid debt and equity deals for investors in search of double digit annual returns combined with equity in multi-million dollar loan portfolios! [You want an intro? Reach out: TrihouseConsulting@Gmail.com ]

 

“The Consumer Financial Protection Bureau (CFPB) took action against an online lead aggregator for steering consumers toward lenders who offered illegal or unlicensed loans that were void in the consumer’s state.”

 

“Zero Parallel, LLC sold consumers’ payday and installment loan applications to lenders it knew were likely to make void loans that the lenders had no legal right to collect.”

 

The CFPB also submitted a proposed order in a separate case that would resolve a pending lawsuit against Zero Parallel’s owner, Davit Gasparyan, for engaging in similarly illegal conduct at his prior company, T3Leads.

 

The CFPB ordered Zero Parallel to end its illegal conduct and pay a $100,000 penalty. The proposed order against Gasparyan would prohibit him from engaging in the same abusive practice and require him to pay a $250,000 penalty.

 

“Zero Parallel steered consumers toward payday and installment loans that were a bad deal,” said CFPB Director Richard Cordray. “We’re ordering Zero Parallel and its owner Davit Gasparyan to pay $350,000 and to stop these illegal abusive practices.”

 

Zero Parallel, a lead aggregator, is based in Glendale, Calif. Lead aggregators buy consumer information—called leads—from lead generators who operate websites that market payday and installment loans. Lead aggregators sell those leads to purchasers, typically payday or installment lenders.

 

Consumers who applied for loans through Zero Parallel’s network had no control over which lenders received their applications. Zero Parallel regularly sold leads for consumers located in states where the resulting loan was void.

 

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB can take action against institutions or individuals engaged in or substantially assisting unfair, deceptive, or abusive acts or practices or that otherwise violate federal consumer financial laws.

 

The CFPB found that Zero Parallel committed an abusive practice by selling loan applications to lenders in a manner that prevented consumers from understanding the risks, costs, or conditions of the loans they were offered, and the order entered today puts a stop to it. Specifically, the CFPB’s consent order requires Zero Parallel to:

  • Ensure loans resulting from applications it sells are not void: Zero Parallel must undertake reasonable efforts to ensure that loan applications it sells do not result in consumer loans that are void under the laws of the consumer’s state of residence.
  • Pay a $100,000 civil money penalty: Zero Parallel must pay $100,000 to the Consumer Bureau’s Civil Penalty Fund.

Davit Gasparyan is Zero Parallel’s president and primary owner. The CFPB previously sued Gasparyan over his involvement with another lead aggregator, T3Leads. In that case, the CFPB today submitted a proposed order, which, if approved, would resolve its lawsuit against Gasparyan.

 

If entered by the court, the proposed order against Gasparyan for his T3Leads-related actions would require him and others under his direction to:

  • Ensure loans resulting from applications he sells are not void: Gasparyan must undertake reasonable efforts, including verifying required licenses for his purchasers, to ensure that loan applications he sells do not result in consumer loans that are void under the laws of the consumer’s state of residence.
  • Ensure that lead generators do not deceive consumers: Gasparyan must not solicit or receive loan applications through any means that uses misleading, inaccurate, or false statements. Furthermore, he must review the content of lead generators’ advertising before receiving loan applications to ensure that it does not contain misleading, inaccurate, or false statements and that the lead generators disclose to consumers how their loan applications will be conveyed to others.
  • Pay a $250,000 civil money penalty: Gasparyan must pay $250,000 to the Consumer Bureau’s Civil Penalty Fund.

So… AGAIN: The CFPB states, “Ensure loans resulting from applications Zero Parallel sells are not void: Gasparyan must undertake reasonable efforts, including verifying required licenses for his purchasers, to ensure that loan applications he sells do not result in consumer loans that are void under the laws of the consumer’s state of residence. Does the CFPB THINK they have regulatory power over federally recognized, sovereign, Native American Indian Tribes? No doubt, the CFPB will answer in the affirmative! 

Jer@TrihouseConsulting.com 702-208-6736 Cell
Knowledge Store: Tribe & State-by-State Licensing Models
http://www.PaydayLoanUniversity.com/ Start a PDL or Title Loan Biz
http://www.eCheckSystem.com ACH, ICL, Debit/Credit card for tribes and State Licensed Lenders

05
Sep

How to Start a Payday Loan Business

What do you need to start a payday loan business?

Equipment and software?

It’s ALL in the Manual. But, here’s a summary of the basics:

Are all of these payday loan startup assets required? I’ve witnessed entrepreneurs begin with less…

  • Business entity: Corporation, LLC, DBA…
  • Accountant
  • Lawyer
  • Phone
  • Computer
  • Laser printer
  • Fax  machine
  • Copier machine
  • Internet
  • In-store security system
  • Sign(s),
  • Either loan management software (LMS) or, at a minimum, Excel (not recommended).
  • Email ability plus build a customer email list (We use Aweber)
  • Text ability
  • Domain Name (Always use a .com)
  • Website
  • Website hosting account. (Start with Bluehost or Hostgator)
  • Business plan
  • Bank account
  • Consumer loan contract
  • Consumer Disclosure statement
  • Fee schedule for website and wall in your store
  • QuickBooks,
  • Consumer privacy policy
  • Business name
  • Logo
  • Marketing materials; POS supplies
  • Social media accounts
  • SOP Manual (Standard Operating Procedures Manual
  • Desk, chairs, etc.
  • Direct mail marketing IP
  • Business cards
  • Collection letter templates for drip campaign
  • Thorough understanding of your appropriate laws, rules, licensing requirements
  • Attend trade group conferences
  • When appropriate, setup accounts with 3rd party vendors (CRA: Credit Reporting Agencies     for example)
  • Join your local charitable community organizations. Build a list…
  • Car wrap for local marketing
  • Employ Enterprise Rent a Car marketing model to local businesses
  • Craigs List account
  • Safe, vault; safe keeping cash
  • File cabinet
  • Copy of The E-Myth (Read it!)
  • Notice of Declination template
  • Copies of all the Exhibits, Check Lists and Documents in our Manual for running your loan business day-to-day
  • Caller ID
  • APR calculator/formula
  • Carry out the research procedures explained in our Manual
  • Voice Synthesizer app