Tag: payday loan laws


What’s a 36% APR Look Like to a Payday Loan Lender?

At first glance, a 36% maximum interest rate on a consumer loan appears to make a great deal of sense. After all, banks and credit unions are paying less than 1% on savings accounts. That equates to $100 in the bank for a year earns $36; $3 per month. No biggie. That barely pays for a family to eat at Kentucky Fried Chicken once/year.

South Dakota, Iowa, Kentucky, Arkansas, the military and a few other states, have passed legislation that enforces a maximum 36% APR on consumer loans.

What’s that look like in the real world? A 36 percent annualized rate offers lenders just $1.38 for every $100 they lend for two weeks. $1.38!

Now I’m not referring to consumers with 780+ FICO scores. Payday loan borrowers have either very poor or non-existant FICO scores. And their employment histories are “sketchy” to say the least.

When a payday loan lender funds a loan to the typical payday loan borrower, chances are 25%+ that this PDL consumer will not make ONE SINGLE PAYMENT!

That’s right! 1st-time defaults for payday loan borrowers typically exceed 25%!

What lender in their right mind would take a chance lending money to consumers having “thin” or non-existant credit files, jobs with Uber, Del Taco – name your poison – for $1.38 BEFORE paying their rent, payroll, store lease, insurance, phones, taxes, CRA (credit reporting agency), marketing costs…? NONE!

So… what’s a world without payday loan products look like? A WORLD OF NSF’s! Non-sufficient funds fees charged by banks and credit unions. A PERFECT WORLD FOR PAYDAY LOAN COMPETITORS!

“Follow the Money!” Who is really behind the anti-payday loan rhetoric? Bankers. Credit Unions. The competition…

According to the South Dakota Attorney General, the 36 percent interest rate cap does not apply to the following lenders:

  • State and national banks
  • Bank holding companies
  • Other federally insured financial institutions
  • State chartered trust companies
  • Businesses that provide financing for goods and services that they sell

Contributors to the fight against South Dakota payday loan lenders included Sioux Falls Federal Credit Union!

The CFPB has stated that it will interpret bank NSF overdrafts as short-term lending. Great! Banks and credit unions should be forced to disclose NSF fees as an APR. We are talking 1500% APR’s!!

Overdrafts are short-term loans. At least that is how 60% of American households treat them. However, because banks call NSF’s “fees” instead of interest, they get away with huge profits and zero disclosure.


According to a study by Magnify Money, a simple $100 overdraft with Citizens Bank for 10 days would cost a consumer $83.93! Is it any wonder this bank wants to outlaw payday loan products? A cheaper loan product?

Bottom line? FOLLOW THE MONEY! Understand that more consumer choices = lower fees and multiple options for solving temporary financial challenges. Short-sided “consumer advocates” usually have an agenda; they are not always looking out for consumers. You must dig a little deeper to fathom what their REAL goals are!

Which brings up my agenda; I’m a capitalist! And I’m not ashamed to be one. You should be one as well. Make a LOT of $$ and spend it the way YOU choose to: not “Big Brother.” You want to build shelter for kids? Feed the poor? DO IT! YOUR WAY!!

Look no further than Cuba, Costa Rica, Argentina… for examples of “big Brother” gone wild.

The Business of Lending Money to Make Money. It’s all right here: “The Manual.” Invest in it. Read it. Read it again. Study it. Then, BEGIN!

Question? Comment? Hate me? Jer@PaydayLoanUniversity.com 702-208-6736 PDT

How to Start Installment Loan Business

How to Start Installment Loan Business




New Mexico Payday Loans

New Mexico Payday Loans

January 1 through December 31, 2014 as reported by New

  • There are currently 148 Active locations that are registered on the state database.
  • There were 65,837 total payday loans conducted by 12,129 consumers registered to the state
    database for the YTD ending this month. These transactions represent a total YTD advance
    amount of $24.3 million and total advance fees of $3.7 million. Additional YTD information
    about these loans is as follows:
  • Average advance amount of $369.38 and average advance fee of $55.71;
  • Minimum advance amount of $9.49 and maximum of $1,947.62;
  • Effective average annualized percentage rate (APR) is 307.89% with an average term
    of 23.88 days;1
  • Average number of loans per consumer YTD is 5.43;
  • YTD average time that a consumer is engaged in an individual payday loan is 27.97
  • YTD average advance fees paid by a consumer is $302.38;3
  • 3,763 payday loans (5.72%) with an advance amount of $100 or less;
  • 50,321 payday loans (76.43%) with an advance amount between $100.01 and $500;
  • 11,704 payday loans (17.78%) with an advance amount between $500.01 and $1,000;
  • 42 payday loans (0.06%) with an advance amount between $1,000.01 and $1,500;
  • 7 payday loan (0.01%) with an advance amount of more than $1,500.
  • There were 7,627 open payday loans (i.e. outstanding loans) on the database as of this month
    end. These loans represent a total outstanding advance amount of approximately $2.8 million
    and total outstanding advance fees of approximately $414 thousand as of this month end.
  • Approximately $3.3 million in advance fees was collected as of this month end.
  • There have been 153 charge-offs / write-offs in 2014 representing a total of $47,972 dollars as
    of this month end which was comprised of $41,534 in advance amounts and $6,438 in advance
  • A total of 59,537 customers have been registered on the database since the inception of the
    program in 2008. Each of these customers would be eligible for a repayment plan pursuant to
    New Mexico law.
  • 1,247 customers have entered into a payment plan YTD and are subject to the restrictions of
    the statutory waiting period.
1) Formula for calculating average APR is (Average Advance Fee / Average Advance Amount) x 365 / Average Term.
Average Term is based on the agreement date and close date for loans closed YTD.
2) YTD average time that a consumer is engaged in an individual payday loan is the overall average of: Total term (in days) for all payday loans conducted by a consumer divided by the total number of loans conducted by that consumer during the
reporting period.
3) Average YTD advance fees calculated as follows: Average Number of loans per YTD customer x Average Advance Fee

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