09
Jan

Payday Loan Store Profits

Have you ever worked at a payday loan store? What are typical payday loan store profits?

Submitted to us by Frank M. from Texas: I’m thinking of opening a franchise payday loan store, but I’m concerned that the company is padding the stats on how much business can be expected. What can I expect for payday loan store profits?

I’m wondering if anyone has ever been a counter clerk at such a place and if you could answer the following questions for me:

  • How many payday loans would you say went through your store per day on average? Of course the answer depends on where the store is located. Downtown Los Angeles will fund more payday loans or car title loans per day than a loan store in Dubuque, Iowa. Competition plays a role as well. I would also advise you to position your store as a “financial service center” offering a plethora of loan products rather than a mono-line payday loan lender.

The AVERAGE U.S. payday loan store funds 133 loans/month. Average fees generated are $61.28 X 133 = $8150.24/month. Add for late fees and NSF fees and the AVERAGE is an additional $956.00 month in revenue for a total of $9106/month gross revenue.

  • What was the average loan size? $383.00 at $16 per $100 loaned = $61.28 in fees per funded payday loan.

The REALITY of the payday loan industry? We have a medium sized 3 year old store in Northern California with generating gross fee revenue of $48,000/month. Store rent is $750/month. We employ 4 part-time employees and 1 full time employee. Very profitable… It’s a collections business. To be successful making money by lending money, you must be good at collections AND monitor employee theft; there’s a LOT of cash!

I would be remiss if I didn’t suggest car title lending as well. In California, we charge 9%/month on the outstanding loan principal to as much as 30%/month. This depends on the customer’s perceived credit risk, the vehicle, the loan principal… Again, VERY profitable. To be clear, a $2600 title loan at the low end – 9% – generates a payment of $234/month and does not reduce the loan principal. Thus, the borrower could conceivably make 6 ea $234.00 car title loan payments and still owe the original loan principal of $2600. Defaults? For us they are less than 1%. No one wants to “lose” their automobile in California!

Finally, why pay a payday loan franchise fee of 8% of your gross revenue for the privilege of teaching you how to start and operate a payday loan, installment loan or car title loan business? It’s not rocket science 🙂 Go to your biggest, baddest future competitor and GET A LOAN. That’s the way to begin.

This strategy and a “million” others are available to you in our “Payday Loan Bible” and our “Car Title Loan Bible.”

payday loan store profits

For more on this topic and all things related to making money by lending money, read our payday loan and car title loan BLOG. And don’t fail to signup for our Monthly Tips, Tactics and Newsletter (your upper right-hand corner of this page).