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


Texas Payday Loan Laws & License

Texas Credit Access Businesses

Texas Credit Access Businesses obtain credit for a consumer from an independent third-party lender in the form of a “deferred presentment transaction” or a “motor vehicle title loan,” more commonly referred to as “payday loans” or “title loans.”

In Texas, the actual third-party lender is not licensed; the credit access business that serves as the broker is the licensee in this Texas CAB/CSO regulated industry. The credit access business charges a fee to the consumer for obtaining the third-party loan; this fee is usually calculated as a percentage of the loan amount.

Texas-CSO-CAB-ManualThe unlicensed third-party lender charges a maximum of 10% interest annually. Often, the Texas third-party lender participates in consumer late and NSF fees thus increasing this 10% APR.

The borrower will sign a promissory note with the lender for the actual loan and a separate credit service agreement with the credit access business. Generally, all documents are signed at the credit access business location and payments are made directly to the credit access business.

The Texas CAB services the loan, markets the loan, and secures the consumer loan on behalf of the third-party lender.

Typically, Texas CAB’s charge $22 – $35 per $100 loaned for a period due on the consumer’s next payday.


Texas CAB Licensing Forms

New License Applications: Apply Online: ALECS

Personal Affidavit

Personal Employment History

Personal Questionnaire

Texas CAB Individual License Forms

Application for New License or Transfer of License

Application Questionnaire

Assignment of Statutory (Registered) Agent

Business Operations Plan

Disclosure of Principal Parties

Disclosure of Third-Party Lenders

Financial Statement-Personal

Financial Statement: Schedules 1 – 3

Financial Statement: Schedules 4 – 6

New Application Checklist

New Application Consent Form

Personal Affidavit

Personal Employment History 

Personal Financial Statement

Personal Questionnaire

Statement of Experience

Statement of Records/Record keeping




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


Payday Loan: 36% APR Cap Rate Impact on South Dakota

36% APR Cap Rate on South Dakota has Devastating Impact on Some So. Dakota Residents.

When will the regulators and folks who have access to cash in an emergency ever understand?

A multitude of organizations, the CFPB, PEW and the Federal Reserve among others, recognize the fact that “47% of U.S. residents cannot get their hands on $400 cash in an emergency!

The few Americans who actually cast a vote, and the various state and federal regulators, must eventually comprehend that passing laws against poor people is not the method for solving this cash flow problem.

Payday, Small Business & Installment Loan Biz

Payday, Small Business & Installment Loan Biz

South Dakota voters didn’t understand the repercussions of the payday loan bill that was passed. Passage didn’t squelch the need for a temporary loan. It simply pushed the financially challenged into the hands of banks and credit unions who charge 1000%+ APR’s for NSF’s, out-of-state lenders and Native American Indian tribes.

Competition for borrowers, Fintech companies, and the daily onslaught of new financial products is the answer to meeting the challenge of making cheap money available to those who experience a sudden car repair, rent payment difficulty, sickness… – Jer Trihouse and yes I’m biased!


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


Payday Loan Collections: How to

Hello Payday Loan Fan,

Insight & Wisdom in small dollar lending. Digging down below the media headlines…

Loan defaults are on the way up!  The good thing is that transaction volumes are increasing as well.  As the economy changes, these are the facts!

So, this month we asked the folks over at few of the sub-prime consumer data scrubbers to contribute their thoughts on how to collect from those clients that fail to live up to their agreements with us.

Enjoy and learn.

Why We Love Complaints & What You Can Expect!

Yes we received another complaint today!

In fact we receive these types of complaints every day.  AND WE LOVE THEM!!

Here’s the latest complaint received by our office (the only modification to this complaint is the phone numbers and last name):

“I have left numerous message’s regarding my account on check #1248 that has been paid in full. Please update your system and contact me asap @ 909-999-9999 cell or @ home 951-999-9999. This matter is very urgent and requires your immediate attention. I cannot write checks!”

“Thank You,

So, why do WE LOVE COMPLAINTS?  Read on and learn. [FUNNY SIDEBAR: Many of these folks also come to us via eCheckSystem ]

All right! Something like 7 to 12 out of every 100 loan customers fail to pay you as agreed; unless you’re an Internet lender, then expect up to 25 out of 100. I’m referring to FTD’s – First Time Defaults.

Their references either don’t exist or they claim they never heard of your customer.

That employer phone number provided by your borrower turns out to be their sister’s cell phone.

Car Title Loan & Payday Loan Boot Camps Available

Car Title Loan & Payday Loan Boot Camps Available

The 3 collection letters you sent to your borrower’s “residence” were all returned; stamped “un-deliverable – no forwarding address.”

What is a lender to do?

Luckily, you do have your customer’s key information such as bank account number, social security number and a copy of their driver’s license.

So every story has a happy ending, right?

Sub-prime consumer data scrubbers to the rescue. You do have an account with a sub-prime consumer data reporting database, right?
If not, go here Sub-Prime Consumer Reporting Agencies and get hooked up!

Yes? OK then. Log into your account with your unique user ID and password. Enter your “bad customer’s” data and bank account information. Then, sit back and relax!

Eventually your “bad customer” will get her (OK, so it could be a him) life back together. It could take two weeks, three months, six months, a year, maybe even three years or more.

BUT, EVENTUALLY your “bad” customer will need to open a new bank account (yes, the service tracks by Social and driver’s license which are both required to open bank accounts) or they will need to use that check or debit card to make a purchase at their local grocery store. Then you’ll get them!  Finally, redemption at last 🙂

You see, the customer’s new prospective bank or payday loan lender will check the Shared Check Authorization Network (SCAN) database BEFORE allowing the customer to open that new checking account or get another loan. If your “bad customer” is applying for another loan, your “credit bureau” will provide you with their updated contact info.

This scenario happens every day; by the thousands.

If we don’t get your customer at the bank, we’ll get them at Wal-Mart or Target, or your credit bureau will alert you.

Eventually you get them. And eventually, YOU GET YOUR MONEY.


14 Ways to Make Money by Lending Money

By: Jer Trihouse: Insight & Wisdom in small dollar lending. Digging down below the media headlines…

Continuing with my Theme, “It’s incredible how profitable and powerful a money lending business can be.”

To make serious money in the payday loan industry, installment, car title lending, even cash for gold, most of us think we have to analyze multiple potential locations, lease a store-front, spend $25,000 plus on a build-out, apply for a license,  invest in signage, hire and train a few employees, launch a grand opening, make some loans and pray our customers pay us back in a reasonable period of time.

Basically, there are 14 ways to make a ton of money by making small dollar loans to consumers and small businesses in the form of installment loans, payday loans, car title loans and line-of-credit loans.

I’ll discuss these in no particular order.

Depending on the responses we get from people like you, we’ll follow up in the future with more in depth analysis of each opportunity.

Sometimes it makes sense to look at our lives and our businesses from a brand new perspective. What’s really important?

What are we really trying to accomplish? What are our true priorities? Where do family, friends, loved ones, our personal passions and our own needs fit into “the big picture?”

Are you at the stage where building an empire with all the responsibilities that entails is your goal?

Are you simply trying to make a good living while enjoying the luxury of short work days combined with a round of golf or an afternoon of fishing?

Or, perhaps you prefer an unfettered life. One in which you truly are the “captain of your own ship” with few entanglements. Just logging onto the Internet a few times a day, running your business from anywhere in the world and enjoying the fruits of your labor with little need to engage with employees and consumers is sufficient?

These thoughts and more prompt me to share my thoughts on our industry and the various ways you can make a great living in it while not necessarily employing the usual stereotype approaches.

Oh, one last thing!

If payday loans or car title loans, installment lending or check cashing… whatever… are not what YOU fantasize about, never fear. My rant is still appropriate for YOU. Just delete the word loan and substitute your dream or vision. Try it! I guarantee you it will work!!

Now, on with the show…

Again, “To make serious money in the payday loan industry, installment, car title lending, even cash for gold, most of us think we have to analyze multiple potential locations, lease a store-front, spend $25,000 plus on a build-out, apply for a license,  invest in signage, hire and train a few employees, launch a grand opening, make some loans and pray our customers pay us back in a reasonable period of time.”

Those of us who have embraced the Internet, think we have to build a web site(s), hire programmers to code some payday loan software, become an expert in search engine optimization and search engine marketing, add a call center to handle all the verifications and inquiries, fund payday loans with our own money, and then become an expert in collections.

Sure, these are the typical approaches and thousands of payday loan operators use these methods to make a lot of money. But not all of us have sufficient funds, know how, or the inclination to make our fortune this way.

Nor do all of us want to spend our days and nights earning our living in such an intense environment.

As you read this keep in mind:


Loan companies – this includes those of us who FUND loans directly to a consumer and lead GENERATORS who sell leads and loan applications – spend big bucks $$$$$ to get a consumer to apply for a payday loan, a car title loan, an installment loan… This goes for the “brick-n-mortar” guys and the Internet operators as well.

Think about this!

Just like insurance applications for autos and health, just like mortgage applications, just like pizza… companies pay millions of dollars each year to get the eyes and ears of their customer to pay attention to them. Each one of these leads and applications are worth A LOT OF MONEY! Borrowers looking for money are EXTREMELY VALUABLE.

If a payday loan or installment loan customer were to get just three $500 payday loans per year for 10 years they would generate between $2250 and $4500+ in fees over their lifetime. No wonder lenders are willing to spend as much as $165 or more to purchase a single payday loan/installment lead in hopes of securing a borrower for life.

So, what are the 14 ways you can make serious cash in the money lending industry? Let’s begin…

[Note: For additional marketing ideas for lending money to make money be sure to read: Part 1 and Part 2 of our Payday Loan & Installment Loan Marketing Ideas series.]

1) Affiliate sales.
Consider building a website focused on payday loans/installment loans/car title loans/money lending… and become an affiliate of a direct lender or a lead aggregator. Get paid for every customer you send them. Lenders typically pay up to $165+ for each funded loan and often $1 to $9 for each loan application that is not funded for whatever reason (length of time on the job, not having direct deposit, no checking account…)

There are several 3rd-party companies that will enable you to accomplish this at zero cost to you!

We have a whole chapter devoted to the specific steps you need to accomplish this as well as a number of companies that will buy your leads. We’ve assembled a Chapter in our “bible,” How to Start a Payday Loan or Title Loan Business.”

2) Lease a store, put a loan business in it and make a lot of money. This is the approach used by 90% of entrepreneurs. If you’re into opening one store, then another, then another… This is a great way to make lot’s of money!

3) Build, or have built, a lending web site. If you’re not into personally building web sites or don’t already have a good connection, there are several really good sources available today to get them built for less than $300. Tie them into a loan software solution (less than $1000) and you can begin driving loan consumers to your web site, qualify them with a few of of the Identification Validation Services (scrubbers) available to lenders, fund the loans and make lot’s of money.

4) Build one loan store, get the formula for success down, then build a web site to service your entire state/province.

How to Start Installment Loan Business

How to Start Installment Loan Business

This is a great method for expanding your market share beyond the 5-8-10 mile radius around your loan store. Your web site will allow you to fund loans to your customers no matter where they live. Your “brick-n-mortar” is licensed thus your Internet operation is in compliance as well.

Whether you choose to use the choice of law model, the multi-state model, the Sovereign Nation Model, the CSO-CAB model or the offshore-model this approach can be very rewarding!

5) If you’re into writing, you can create articles about lending/borrowing and sell them to loan funding companies, payday loan lead generators, payday loan blogs and payday loan affiliates. All of these entities need content to help them rank well in search engines in order to fund payday loans or to sell payday loan leads.

6) Sell completed loan websites. There’s a huge demand by entrepreneurs for complete, turn-key loan web sites designed to fund loans and sell leads. The informed loan lead generators and loan funding companies realize a series of linked “micro-websites” (static 4-5 page web sites) are extremely helpful for ranking well in the major search engines.

You can create and sell one or a network of loan websites with the goal of generating loan leads and full applications by consumers.

Additionally you could tie one or more of these niche websites into an off-the-shelf loan software solution thereby enabling the purchaser to actually fund and manage a loan Internet business. We get several inquiries every month just for this type of project.

7) Sell your professional expertise to loan companies. It’s a $50 billion dollar business. There is a great demand for lawyers, compliance experts, offshore services, regulatory skills, software developers, collection professionals, web site hosting, store location selection, advertising pros, search engine optimization, store build outs, signage, logos, loan software and on and on. You can become a consultant regarding the entire industry or focus on a single niche like software selection or compliance and regulatory issues.

You can even advertise here:

8) Offer complementary products and expertise to lenders. Rapid tax refunds, car title loans, check cashing, pawn shops, bail bonds, buying and selling of scrap gold and silver, credit repair, mortgages and more are a natural fit for our loan demographic (read Wal-Mart customer).

You can become a reseller, an independent sales operation for an existing product or service as well as develop your own complementary product or service for the industry. Loan management software consultants, ACH, ICL, debit/credit card processors, compliance professionals, lawyers focused on lending, anti-money laundering specialists…

Loan companies are on the lookout for additional revenue streams, complementary products and services, and better, cheaper, easier ways of doing things.

9) Do SEO (search engine optimization), Social Optimization (YouTube, Instagram, Reddit, Digg, FaceBook, LinkedIn, Twitter, Google+), Direct Link Marketing, Chat Rooms… for loan lead generators and loan funding companies.

Loan leads and applications are bought and sold everyday by the tens of thousands for $9.00 to $165 and more per lead. Remember that one good, returning loan consumer is worth thousands of dollars over their lifetime to a loan funding company. Enova, a publicly traded lender, did nearly $500M in small loans in their last quarter!

10) Build web sites focused on loans and place targeted ads that provide revenue to you, the owner of the site. It’s like selling real estate. Google Adsense, Bing, Facebook, Youtube, DuckDuckGo… are extremely good at doing just this and generate tens of millions of dollars for web site owners every month. Advertisers like,,… pay the search engines to allow their advertisements to appear on related web sites.

[NOTE: Google and others are evaluating this and changing their policies on loans >36% APR’s. I think this is a HUGE disrupter for the incumbant search engines and a tremendous opportunity for those of us who want to capitalize on “big brother” Google!.]

For an example go to: or .
The ads placed “above the fold” are provided by Google via a little piece of code placed on your web page. Each time a visitor clicks on one of those ads the web site owner earns a fee. It’s not uncommon for a web site owner to earn several thousand dollars per month from one web site via these click revenues.

[Again, this is changing as I write this! Read my thoughts and the opportunities this policy presents on my Blog.]

11) Manage PPC (Pay Per Click) campaigns for loan companies.

Google [not >36% APR], Yahoo, Bing-MSN and more all offer advertisers PPC programs. Few lenders understand the strategies and tactics one must know to successfully run a PPC program. After all, if you don’t know what you’re doing, Bing and Google will blow your entire monthly marketing budget in a single day. We’ve witnessed very sophisticated loan companies blow through $5000, $10,000 and more in less than 72 hours because they don’t know what they’re doing.

To achieve ranking on page one of the major search engines for a keyword like “payday loan” or “installment loan” is very challenging; especially in the organic [free] results. The PPC sponsored areas are very competitive and can be very expensive if you don’t have a clue.

Another often overlooked area is local search.

VERY few brick-n-mortar lenders understand the value of ranking well in the top search engines for local search.

When a potential customer uses their favorite search engine, or their cell phone, to find their nearest loan store and your business doesn’t even appear on the first page, YOU HAVE A PROBLEM.

Try it.
Go to or whatever your favorite search engine is and search for “Las Vegas payday loan store” or “Houston payday loan store” or “your city payday loan store.” Are you there? On page one? If not, you’d better start working on this!

(Don’t forget! This customer searching for a car title, scrap gold or payday loan store near them is probably on their cell phone.

Top SEO people are worth their weight in gold! Those of us willing to learn how to do this become golden.

12) Produce videos: pawn, payday loans, car title loans, how-to instructional videos like “How to Make a Collection Call” for example.

A high ranking in a search engine for a competitive key word phrase like “payday loan” or “cash advance” or even “no Teletrack payday loan” are worth millions of dollars to a payday loan funding company. But to rank well in a search engine a website needs content; good, keyword rich, focused content.

Search engines, especially Google & YouTube, love videos! Direct lenders and lead generators need good content to rank well. If your team can create appropriate loan focused videos that can generate some buzz you will be well paid for your efforts!

13) Create Blogs. Create a Blog focused on a very narrow niche within the loan industry. Think installment loans, payday loans, car title loans, loan software, ACH, collections, search, consulting… Not only can you place income producing advertisements on the site but you could eventually solicit advertisers to place advertising on your Blog.

Blogs focused on extremely specific niches generate traffic from people really interested in the topic or they’re doing research. Advertising income and click-thru rates of 10% or more are achievable resulting in significant monthly revenue for the owner of the Blog.

The more specific your Blog the less competition you’ll face.

Seek out specific advertisers for your Blog. Once you build up significant traffic you can not only develop substantial revenue from “clicks” but you can offer to feature a specific advertiser for a fee.

Finally, you could eventually sell your Blog outright for substantial dollars.

For another example of a payday loan Blog:

14) Create a Facebook page for your business. Or, specialize in performing this service for loan companies. Lenders need Google+, Facebook, Pinterest, Instagram and Twitter persona’s as well.

Just one or two of these can generate several thousand dollars of income every month.

Any of these ideas, if implemented properly, will lead to significant, recurring monthly income for YOU!


The question is, how do you want to live? How do you want to spend your day? How much money do you need? How hard do you want to work?

And finally, what’s your dream?

Shameless plug: Our “Payday Loan Bible” available at:  discusses the majority of these ideas in depth and includes a great deal of the resources and strategies discussed here.

Comments? Suggestions? What did we forget? Need more insight or “how to” for some aspect of this rant? Don’t be bashful!! TALK TO ME!

Oh, and again! One final point.

What are you REALLY into? What’s your passion?

Whatever it is, DELETE the word “payday loan” or “installment loan” from this rant and substitute YOUR passion. Chances are these ideas will work for you in any endeavor.  Now DREAM…

For more resources related to making money by lending money, visit: our Resources Page.


Texas Payday Loans

How Payday Lenders Use Credit Access Businesses to Offer Loans exceeding Texas’s 10% Interest Cap.

By: Jer at Trihouse Consulting. Article 16, Section 11 of the Texas Constitution imposes a 10 % cap on the amount of interest that can be charged on personal loans. What’s so amazing is that it’s estimated that the state of Texas is responsible for more than 60% of the nationwide annual profits flowing to the payday loan and car title industries.

How? Credit Access Businesses (CAB’s) and Credit Services Businesses (CSO’s). Texas regulators allows lenders to incorporate their storefronts and websites as separate, but affiliated, entities that—on top of the 10 % interest they collect on behalf of a lender—then legally charge additional  fees and interest for the services that they provide by “referring” consumers to the lender and servicing the loan.

In Texas, payday and auto title store fronts are allowed to register as Credit Access Businesses (CAB) under the state’s Credit Services Organizations Act.

This  Act imposes no limits on fees, interest rates, loan amount size, or refinances, and it does not require the CAB to assess ability to repay based upon the consumer’s income. [Although obviously, this is a calculation all lenders make in order to make certain the borrower can successfully pay back the loan. Lenders do not simply give away money. They need to be repaid! [See our Manual for strategies to accomplish this.]

Accordingly, for single payment products  – payday loans for example – offered in Texas, CABs often charge an “origination fee,” typically ranging from $22 to $30 per $100 borrowed and, if the borrower is unable to repay the loan by the due date, a “refinance fee” that is usually identical to the amount charged as an origination fee.

Because of the third-party lending structure, CABs also charge consumers up to an additional 10 % annual interest rate while the loan is in repayment on the lender’s behalf.

How to Start Installment Loan Business

How to Start Installment Loan Business

The state’s “estimated average payday loan borrower can pay up to $840 for a $300 loan and monthly fees for a $4,000 auto title loan often exceed $1,000.” [This estimate by the State of Texas is questionable. Obviously, if we were to consider a “Bell Curve” there would be Texas payday loan borrowers on both ends of the “Bell.”]

The Point? Operated “correctly,” a Texas based payday loan business can be very profitable. For a complete, step-by-step explanation of “How to Start and Operate a Payday Loan Company” in any State, we recommend our Manual; considered by many to be “The Bible” of the lending industry.

Have questions? Need help? or 702-208-6736


Arizona Proposed H.B. 2496 Relating to Consumer Access Line of Credit

Arizona consumers, with any luck, will have access to a new installment loan financial product to help them meet emergencies.  Since the payday loan laws “sunset” several years ago, Arizona borrowers have had few choices to solve their short-term financial worries.

House Bill 2496 would allow people with poor credit ratings to borrow up to $2,500 a year at the low, low interest rate of 164.25 percent.

Here are some highlights from the new Arizona Bill 2496:

Defines a CALC loan plan as a written or electronic agreement in a record between a licensee and
a consumer establishing an open-end credit plan under which the licensee contemplates repeated
noncommercial loans for personal, family or household purposes that are all of the following:
a) unsecured by personal property or real estate.
b) without fixed maturities or limitation as to the length of term.
c) subject to prepayment in whole or in part at any time without charge or penalty

Stipulates that a person is engaged in the business of entering into CALC loan plans and making CALC loans if the person induces a consumer, while located in this state, to enter into a CALC loan plan or making a CALC loan in this state through the use of the internet, a fax, a telephone or another means.

How to Start Installment Loan Business

How to Start Installment Loan Business

Stipulates that this chapter does not prevent a licensee from conducting the business of entering into CALC loan plans and making CALC loans over the internet.

Fees 42. Allows a licensee to only charge and collect a daily transaction fee to defray the ordinary costs of opening, administering and terminating a CALC loan plan, including certain specified costs.

43. States that the daily transaction fee is not interest and may not exceed a daily rate of 0.45 percent of the outstanding principal balance.

44. Prohibits a licensee from entering into a CALC loan plan or making a CALC loan plan having an annual percentage rate greater than that set forth in federal law to a person who is either: a member of the United States Armed Forces who is on active duty, on active national Guard and reserve duty, or a dependent of one of these persons.

45. Prohibits a CALC loan plan from having an outstanding principal balance in excess of $2,500 at any time.

46. Requires a CALC loan plan to require a minimum payment on or before the due date of each billing cycle in an amount sufficient to reduce any outstanding principal balance by at least eight percent per month or an amount calculated to pay off the entire principal within one calendar year, whichever is greater.

47. Allows a licensee, if a consumer defaults under the terms of a CALC loan plan and the licensee refers the consumer’s account to an attorney, to: a) if allowed under the CALC loan plan, charge and collect from the consumer reasonable attorney fees; b) refer the consumer to an approved consumer credit counseling agency and offer concessions with regard to daily transaction fee, repayment schedule and other terms as agreed; and c) charge and collect interest following the default of the consumer or a judgment in favor of the licensee at a periodic interest rate not to exceed the United States prime rate plus 15 percent a year.

Ability to Repay

57. Requires a licensee to underwrite each CALC loan to determine a consumer’s ability and willingness to repay the CALC loan, before entering into a new CALC loan plan or increasing the credit limit of an existing CALC loan plan. 58. Requires a licensee to obtain information from the consumer relating to the consumer’s income and expenses and to validate a consumer’s supplied information using at least one consumer credit report. 59. Allows a licensee to validate a consumer’s supplied information using other reasonably reliable sources such as debt verification services, the consumer’s bank statements, tax returns, payroll information, benefits or child support statements or other information that is either provided by the consumer or is commercially available online.

63. Prohibits a consumer from having more than one CALC loan plan at any one time.

64. Allows the Superintendent to require licensees to confirm through the use of a state-approved database that a consumer does not have more than one outstanding CALC loan plan at any one time or that a CALC loan does not cause the CALC loan plan to exceed an outstanding principal balance in excess of $2,500.

65. Requires that the database: a) be capable of real-time queries; b) be selected by the Superintendent through an open bidding and review process; and c) have licensee-paid usage fees for the database and not have consumer-paid usage fees.

113.Allows a consumer, if a consumer access line of credit has accumulated a past-due balance but has not defaulted, once per year, to request, and the licensee shall approve, that the past-due balance be repaid on an interest-free balance in equal installments to be added to the minimum payment for the outstanding line.

114.Allows a consumer who has a past-due balance and who has not defaulted and a licensee to agree to other repayment options by mutual agreement.

115.Allows a consumer to request and a licensee to approve a lower pay-down rate or minimum payment, except that a minimum payment that would fail to reduce outstanding principal by at least two percent per billing cycle may not be approved.

House Bill 2496


Payday Loan, Title Loan & Installment Loan Marketing Ideas Part 2

Part 2: Payday, Car Title & Installment Loan Marketing Ideas

This is a short followup to our previous email/Post entitled:

“Payday, Installment & Title loan Store Marketing Ideas: 101”

Every lender is whining about how to get more customers and fund more loans.

The truth is there is no magic! To scale your loan portfolio requires you to get-off your butt, do something, test your efforts and MEASURE the results.

As a result of our previous lengthy Post on “Marketing 101 Ideas,” dozens of operators called and emailed with questions and comments.

The #1 question posed to me by storefont lenders? How do I find potential referral partners?

You may recall this idea from the Post:

“Referral programs with businesses that service our demographic and need to be made aware of how we can help the merchant make more money. I’m referring to lawyers, bail bondsman, mechanics, Aamco transmission, brake shops, tire and rim companies, other PDL/title loan stores that employ different loan criteria or don’t service the same loan areas we do, tax preparers… GET CREATIVE!”

My answer? Google it! [See image bottom of this Post.]
Search for “bail bonds service los angeles 90057”
Click on each of the red icons
Enter the Company name, address, phone number, website [if they have one] etc. in a spreadsheet.

Depending on your circumstances, pick at least one day every week to do the following:

  • Arm yourself with some of your company pens, pickup some donuts and GO VISIT THEM!
  • Introduce yourself
  • Share how your loan service can help them make more money.
  • Discuss your paid referral program with them. [IE: Offer them $25, $35, $50 per funded referral.]
  • Suggest they have a potential referral customer mention the Bail Bonds Company for a 10% discount on their first loan with you.
  • Pick up their business card and leave; after you leave them some of your company pens and the donuts.
  • Document who you met, what was said, what you promised… on a yellow pad while in your car before hitting your next bail bondsman.
  • Visit as many of these potential referral parners as you can that day.
  • Return to your office and enter your notes from these meetings into your spreadsheet.

Now, make certain that during EVERY inbound phone call you receive or customer walk-in, your Team asks “How did you hear about us?” [BEAT THIS INTO YOUR ENTIRE TEAM!]

Be MANIC about paying your referral partners their fees. Deliver the CASH to them IN PERSON!

Rinse and repeat… Bail bondsman, lawyers, auto repair shops…

FOLLOW-UP & PERSISTENCE will increase your income! Get organized.

This is not rocket science!

Now go make some MONEY!

payday loan, car title loan, installment loan marketing ideas

Use Google Maps to Discover referral partners for payday loan, installment loan and car title loan lenders.