Category: Strategy

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

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

15
Jul

Payday Loan Stores vs Internet Lending

Lending Money: Brick-n-Mortars are NOT Dead

By: Jer Ayles at Trihouse Consulting

35 million U.S. households cannot wait 3-5 days for money to be transferred into their bank account – if they’re lucky enough to have a bank account! So, brick-n-mortars are NOT going away; at least not today. Here’s why


According to the FDIC and every Tom, Dick & Harry, 50% of U.S. residents have a credit score of 680 or less.  That means no credit! No borrowing. No loans.

This group includes 9,000,000+ households who do not have a bank account; 7% of the population.

An additional 20% percent of U.S. households (24.5 million) are underbanked; meaning that the household had a checking or savings account but also obtained financial products and services outside of the banking system. That’s payday loans, car title loans, pawn, rent-to-own, etc.

What do these all these statistics mean? 34,000,000 households cannot borrow a nickel to fix the car, pay for a prescription, turn on the water, gas, electricity, cell phone, internet, cable serviceJ, avoid an NSF


If you’re reading this, it’s likely YOU cannot fathom finding yourself in this situation!

But I can promise you, as the owner of several payday loan and car title loan stores/internet properties, and a very busy consultant for the “business of lending money” industry, THIS IS THE CASE FOR MILLIONS OF CONSUMERS WORLDWIDE!

Imagine; 24 MILLION households unable to get their hands on $400 in an emergency.

So, for those of us who are tech savvy and have access to a multitude of options for credit and cash, it’s impossible to “put ourselves in others’ shoes.”

On the other hand, for those of us seeking “enlightenment,”  simply pay a visit to your local payday loan store for a couple of hours and see the light!

You think payday loans are a rip-off?  I know you do! I used to also. But, consider this:

 

Surprised? That’s right! A typical bank or credit union NSF fee has a 1400%+ APR.

Check out the reconnection fees for utilities. And credit card late fees? FUHGEDDABOUTIT!

Here’s the crazy part: The banks have zero risk and yet they get away with $35 NSF fees. No risk, you ask? Correct. The banks and credit unions are at the front of the line when a customer gets paid. The bank takes their cut before paying any other consumer transactions. What? The consumer lost their job and zero bucks are going into their bank account? No problem for the bank. They simply place their customer in Chexsystems and wait. Their “bad” customer will NEVER get a bank account again UNTIL the bank gets paid.

Credit unions have an even better deal. They are considered NON PROFITS! They do not pay taxes like the rest of us. But, they still get away with $35 NSF fees.

The big problem for these 35M households is the fact they can rarely wait for their emergency money to “hit” their bank account via the various payment/money transfer rails available today. Sure, Fintech companies and old school payday lenders are slowly changing this situation.

But, the PREFERRED method for the “underbanked” to solve their cash crunch is to walk into a brick-n-mortar small dollar lender and walk out with CASH ten minutes later!

END OF STORY. [Send comments and questions to: TrihouseConsulting@Gmail.com ] 702-208-6736

29
Jun

Resources for Payday Loan, Title Loan & Installment Balance Sheet Lenders

We’ve made several additions to our trusted repository of resources for payday, title and installment lenders. These include banks, 3rd party lenders, debt traders, lawyers, ACH, loan management software, mobile website designers, bonds, SEO, call centers…

Here’s the link to the page. All contact info and websites are included:
Installment – Payday – Title – Loan – Lender – Resources

Best!
Jer – Trihouse
702-208-6736 Call or Text

01
Jun

Time to Evolve to a New LMS!

Time to Shift to a New LMS?
If you are not happy with your current payday loan, title loan or installment loan [LMS] provider, don’t hesitate to look for a new one. Sometimes we make shortsighted decisions  to take the path of least resistance. In any case, it’s important you know  what’s out there, the cost, and the support levels you will realize by making the move.
There is new, exciting LMS technology in our market that can take your lending programs to a whole new level when it comes cost, ease of use and customer acquisition. First-time customer acquisition costs exceed $200+. Customer onboarding and servicing can break you while destroying your margins. Your LMS can make the difference! Recognize that reducing reoccurring monthly transaction costs will dramatically improve your portfolio’s performance; particularly when costs are reduced 20-40%.
Top complaint about LMS? The length of time and the out-of-pocket expenses for custom programing and integration. Solutions exist NOW!.
What if you could lower your costs, get into a better LMS that is built with the lenders interests in mind? This is now all possible. It’s time to set up a demo.
Specifics? Reach out now!! TrihouseConsulting@gmail.com
AND, don’t hesitate to visit: http://www.paydayloanuniversity.com/resources/ LOOK AT “Loan Software.”
20
May

Payday Loans: Banks & Credit Unions Want a Piece Again

By: Jer – Trihouse. The payday loan industry took a huge hit in August 2013 as a result of the Obama administration’s ACH debacle via “Operation Choke Point.” Hundreds of lenders including tribes, state licensed and offshore lenders were forced to leave consumers high and dry without access to short-term emergency funds.

I’ll NEVER forget that day! I had arrived in Paris for a month’s holiday the prior day and suddenly I was inundated by my payday loan business partners, peers, competitors and friends with their tales of woe. Their ODFI’s and ACH processors were dropping them like flies. We had to scramble to collect on hundreds of millions of dollars in consumer loans! But how?

I must have spent 80 hours on Skype my first week in France in an attempt to solve our payment process and banking issues.

Eventually, we developed a plan and survived. Many of my friends did not.

Today, things are completely turned around for us. It’s back to business as usual. Banks, ACH processors, credit and debit card processing are relatively easy to secure. New lenders with creative loan products are entering our game daily. Installment loans, FinTech, P2P, marketplace lending, loan-by-phone… exciting times and tremendous opportunity!

As I pointed out in a previous article, Native American Tribes loaned $1B plus last year. One publicly traded company lent $500M in just one recent quarter while others report similar results. Meanwhile, thousands of brick-n-mortars continue to thrive in 33+ states and new lenders enter this space daily. “Pew estimates 12 million Americans take out payday loans each year, spending $9 billion on loan fees.” Add car title loans, installment loans, line-of-credit loans… And, let’s not forget: 53% of American households cannot get their hands on $400 in an emergency! Difficult to fathom but so true.

Why? Because consumers and SMB’s continue to seek loans at record rates. And, they are willing to pay 300%+ APR’s for the privilege. (NOTE: I rarely refer to APR’s but it seems appropriate here.)

So, it’s no surprise to me that the Wall Street Journal ran a piece with the headline:

“Banks Want a Piece of the Payday-Loan Pie”

“Pushed out of short-term loans by 2013 regulation, banks and credit unions hope for a comeback.”

This is great news for alternative financial lenders!

I welcome this development!!

With banks and credit unions (recall credit unions do not pay taxes) lobbying for less regulation and declawing the CFPB, our future is secured.

As WSJ reporter Yuka Hayashi writes, “Letting banks and credit unions offer small loans, proponents say, would help the millions of U.S. households that pay billions of dollars in fees each year to payday and auto-title lenders that often charge annual interest rates exceeding 300%.”

And, this movement by banks and CU’s clears the path for alternative finance lenders like us to continue to offer our consumers fast, easy, transparent loan products that solve our customers financial challenges. No bank or CU can beat us at our game! We are laser focused on our customers and their needs.

Honest reporters acknowledge (Lisa Servon, I’m thinking of you 🙂 that a visit to a payday loan store or website CLEARLY and CONSPICUOUSLY reveals EXACTLY what the fees are for a payday loan, an installment loan, a car title loan, a line-of-credit product…

Can ANY bank or credit union say the same thing about their fees? A RESOUNDING NO!

Our future, in spite of reports of our death being greatly exagerated, is certain!

Need help with your small dollar loan business? Click for help.

  • Credit card processing: push-to-fund processing
  • ACH services
  • Debit card
  • Check-21/RCC
  • Online or brick-n-mortar
  • Tribes, state-by-state, offshore

04
May

Criteria Required for an Installment Loan or Payday Loan

Borrower Requirements for Payday & Installment Loans

At a minimum:

  • Military exemption
  • Debit card
  • Completed payday or installment loan application
  • Proof of income (Normally a bank statement(s)
  • Maximum of 2 bank account NSF’s in past 30 days
  • Demonstrate an ability to repay the loan; meet the terms of the loan

Note: Again, these are the very minimums. Your loan business minimum requirements may differ. And many operators will disagree with my last point!

Where are you on your installment loan lending business evolutionary scale?

If you’re a startup, having a serious amount of capital you need to put to work quickly, you will have to embrace more risk and expect higher first-time default rates.

Your first time customer acquisition costs will be higher than a fully matured portfolio as well.

How to Start Installment Loan Business

How to Start Installment Loan Business

On the other hand, those of us with legacy portfolios having displayed stability beyond the first 2+ years, will likely treat our loan portfolio as an annuity. 80% plus of your customer base will be returning borrowers. 10% – 20% of your customers will have to be replaced annually.

There are a multitude of strategies to profiting in the business of lending money to make money; without the need to actually fund loans. Here are 14 different ways I discussed previously: “14 Ways to Make Money in the Payday Loan – Installment Loan Space.”

Finally, employ one or more of the sub-prime consumer agencies we thoroughly discuss in our Manuals a few of which are listed here: Payday, Car Title & Installment Loan Resources

28
Apr

Payday Loans, Small Business Loans and Car Title Loan Strategies

 

Payday, Small Business & Installment Loan Biz

Payday, Small Business & Installment Loan Biz

It’s a well known fact that it costs a bank as much to make a $100,000 loan  as it does a $1,000,000 loan; resulting in less profits for the bank. Thus, banks prioritize small and medium businesses [SME’s] by the loan amounts each SME requests.

The current challenge is that about 60% of small businesses [SME] want loans below $100,000.

Thus the opportunity! While the CFPB and state AG’s – in addition to city govermnment – attack the payday loan/installment lenders, there lies a HUGE opportunity for lenders to fund small businesses.

According to The Harvard Business Review and Morgan Stanley, “Last year, less than $10 billion in small-business loans was funded by online lenders, a fraction compared to the $300 billion in SME loans outstanding at U.S. banks. However, the current meager market share held by online lenders masks immense potential: Morgan Stanley estimates the total addressable market for online SME lenders is $280 billion and predicts the industry will grow at a 47% annualized rate through 2020. They estimate that online lenders will constitute nearly a fifth of the total SME lending market by then.”

Your goal? Transition from a 100% focus on consumer lending, where the HEAT is on, to small business lending where there are very few rules and virtually zero strong brands as of today.

Stay under the radar; it’s easy. You have, or can easily obtain, all the tools, knowledge, and technology required to pivot from payday and installment lending to servicing small business funding requirements. It will be years before the leviathan – read FED’s and state AG’s – begin to address this lending opportunity.

Let me emphasize the findings of The Harvard Review working paper: “One answer became clear: a gap in access to credit for small businesses did exist and was 1 Mills, Karen G., and Brayden McCarthy. “The State of Small Business Lending: Credit Access During the Recovery and How Technology May Change the Game.” Harvard Business School particularly persistent in small dollar loans— those defined as under $250,000. This finding is noteworthy, as this is the level of loan that most small businesses want; more than 70 percent of small businesses seek loans in amounts under $250,000, and more than 60 percent want loans under $100,000.”Harvard-SME-Small-Medium-Business-Lending-2017

Here’s a link: Harvard-SME-Small-Medium-Business-Lending-2017

23
Nov

Wall Street Journal Reports Trump to End Payday Loan Rules

By: Jer Ayles at Trihouse. Alright, alright, alright!!!!!

The good news for those of us in the payday loan industry continues! Not only are valuations for payday loan stores already rising in conjunction with the payday loan publicly traded companies – check out Enova for example – but the phones are ringing off the hook, investors are looking for opportunities to collaborate with experienced operators, a major content development media company is planning a 6 part small dollar loan financial series, Elizabeth Warren is foaming at the mouth, our Payday Loan Startup Manuals are selling like hot cakes again, entrepreneurs are launching apps of all kinds, funding platforms requiring only a cell phone account for a borrower to receive their loan funds in 60 seconds [just one of MANY startups I’m collaborating with], performing portfolios for sale… and today the Wall Street Journal reported the following commentary by Committee chairman Rep. Jeb Hensarling (R., Texas), who is under consideration to become Treasury secretary in the Trump administration:

“Both rules were cleared by agencies, not Congress. Mr. Hensarling said the GOP would like to end recent rules on retirement advice and payday loans.”

NOTE: The destruction or “reconfiguration” of the CFPB or Frank-Dodd doesn’t mean a return to the dark ages for consumer financial services! Rather, it empowers entrepreneurs to continue to combine technology with money lending to build financial products that make sense for borrowers and lenders. These developments enable brick-n-mortar and FinTech lenders to compete for any borrower with a dream to launch their own business or successfully navigate a temporary, emergency financial challenge!

Jer Trihouse

Jer – Trihouse

WSJ – WASHINGTON—Congressional Republicans hope to scrap two contentious rules meant to rein in conflicted investment advice and payday lenders once President-elect Donald Trump takes office.

However, despite the Republicans’ big election victory that will keep both chambers of Congress under GOP control, the party’s path to legislating still faces the hurdle of a Democratic filibuster, among other factors

House Financial Services Committee Chairman Jeb Hensarling (R., Texas) said Wednesday that talks were being held with Mr. Trump about uprooting a Labor Department rule regulating how brokers sell retirement investments and a Consumer Financial Protection Bureau proposal aimed at holding down interest rates and increasing disclosures for small-dollar loans. Read More from the source: Wall Street Journal.

Question? Jer@TrihouseConsulting.com Cell: 702-208-6736

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