THE BLOG

20
Apr

Maximizing Results: How AI-Driven Persuasion is Transforming Call Center Debt Collection

Subprime consumer debt collection ideas and strategies

Unraveling the Art of Persuasion: The Cozy Alliance of Persuasion and AI in Revamping Debt Collection Call Centers

Debt collection is a tricky business, and for those hardworking folks at call centers, mastering the gentle art of persuasion is absolutely vital.

Picture this: call center agents smoothly chatting away, employing just the right persuasive techniques to help customers and their organizations find their way to financial stability.

Sounds like a win-win, right?

The world keeps spinning, and the debt collection industry is no exception.

To keep up with the fast pace, call center management and employees must be on their toes, learning about the newest strategies and tech tools that can help them navigate the winding road of consumer debt collection.

By being in the know, they’ll be better prepared to charm and negotiate with consumers, making everyone happier in the end.

Imagine the boost in employee performance when they have access to AI-powered platforms and a warm, supportive work environment.

Now, that’s the recipe for success in the debt collection world!

But wait, there’s more!

Note: This Article is a portion of the Collections Chapter in our “bible:” The Business of Lending to the Masses.

A Warm Welcome: The Crucial Role of Persuasion in Debt Collection

Let’s dive into the tough yet fascinating world of debt collection, where call center agents must gracefully wield the art of persuasion to retrieve those pesky bad debts from consumers who’ve stumbled into default.

With the right persuasive techniques in their arsenal, they can amp up their debt collection success rate, paving the way for financial stability for businesses.

In this friendly read, we’ll uncover a range of easy-to-follow methods designed especially for those call center heroes dealing with debt collection.

  1. Establishing Trust and Rapport

Building trust and rapport with consumers during debt collection calls is crucial for successful negotiations. To establish trust and rapport, call center employees should:

  • Be empathetic and understanding of the consumer’s situation
  • Use a calm and respectful tone throughout the conversation
  • Identify themselves and the purpose of the call
  • Remain honest and transparent about the debt and the consequences of non-payment
  1. Utilizing Social Proof

Leveraging social proof can help call center employees demonstrate that others in similar situations have successfully resolved their debts. To use social proof, employees can:

  • Share stories of other consumers who have successfully paid off their debts
  • Mention the positive outcomes experienced by those who have resolved their financial obligations
  • Highlight how the company has helped numerous individuals in debt
  1. Crafting Customized Payment Solutions

Offering tailored payment solutions can encourage consumers to commit to repaying their debt.

Call center employees can create customized payment plans by:

  • Understanding the consumer’s financial situation and determining a realistic payment schedule
  • Offering multiple repayment options, such as installment plans or reduced settlements
  • Emphasizing the benefits of resolving the debt, including improved credit scores and reduced stress
  1. Employing the Principle of Reciprocity

The principle of reciprocity can be a powerful tool in debt collection, as consumers may feel more inclined to cooperate when they believe they are being treated fairly.

Call center employees can apply this principle by:

  • Offering to waive late fees or penalties in exchange for timely payments
  • Demonstrating flexibility and understanding in working with the consumer to find a suitable repayment plan
  • Providing helpful resources, such as budgeting tips or financial education materials, to assist consumers in managing their finances
  1. Tapping into Emotional Appeals

Connecting with consumers on an emotional level can be effective in persuading them to address their debt.

Call center employees can harness the power of emotions by:

  • Acknowledging the stress and anxiety that debt can cause and expressing empathy for the consumer’s situation
  • Focusing on the positive outcomes of resolving the debt, such as improved financial stability and peace of mind
  • Encouraging consumers to envision a future free from the burden of debt
  1. Leveraging the Power of Scarcity

Creating a sense of urgency can motivate consumers to take action and address their debt.

Call center employees can instill urgency by:

  • Offering limited-time incentives, such as reduced interest rates or settlement offers
  • Reminding consumers of the potential consequences of non-payment, including legal action or adverse credit reporting
  • Setting clear deadlines for accepting a proposed repayment plan or offer
  1. Harnessing the Authority Principle

Demonstrating authority and expertise can instill confidence in consumers and encourage them to trust the call center employee’s guidance.

To showcase authority, employees can:

  • Clearly explain the debt collection process and the consumer’s rights and responsibilities
  • Cite relevant laws or regulations about debt collection
  • Provide accurate and up-to-date information on the consumer’s account and the company’s policies
  1. Ten Ideas and Methods for Incentivizing Call Center Employees

Motivating and incentivizing call center employees is crucial for maximizing their performance and efficiency in debt collection.

Here are ten ideas and methods for creating a supportive and rewarding work environment:

  1. Performance-Based Bonuses: Offer monetary rewards to employees who consistently achieve or surpass their debt collection targets.
    • Be sure to create incentive plans that reward the individual AND the Team immediately. If not daily, at a minimum, weekly.
  2. Recognition Programs: Implement a system to recognize and publicly acknowledge top-performing employees, celebrating their successes and hard work.
  3. Flexible Work Schedules: Allow employees to choose their work hours or offer remote work options, promoting work-life balance.
  4. Professional Development Opportunities: Provide access to training programs, workshops, or seminars to help employees improve their skills and advance their careers.
  5. Clear Career Paths: Establish transparent career paths within the organization, encouraging employees to strive for growth and advancement.
  6. Friendly Competitions: Organize team-based contests or individual challenges with attractive prizes or incentives for the winners.
  7. Employee Feedback: Implement regular feedback sessions to allow employees to voice their opinions and suggestions, fostering a sense of ownership and engagement.
  8. Team Building Activities: Organize team outings, lunches, or other social events to strengthen employee bonds and create a positive work environment.
  9. Wellness Programs: Offer wellness initiatives like gym memberships or stress-management workshops to support employees’ physical and mental well-being.
  10. Mentoring Programs: Pair experienced employees with newer team members for guidance and support, fostering a culture of collaboration and continuous learning.

Conclusion:  Incentivizing call center employees is vital for enhancing their performance in debt collection.

By implementing these motivational techniques and creating a supportive work environment, organizations can empower their employees to excel in the art of persuasion and achieve outstanding results in collecting bad debt from consumers.

Leveraging 24/7/365 AI-Powered Platforms for Enhanced Debt Collection in Call Centers

AI-powered platforms are revolutionizing how call centers approach consumer debt collection.

Call centers can improve efficiency, optimize workflows, and enhance customer experience by incorporating artificial intelligence into the collection process.

Here are some ways AI can play a decisive role in debt collection:

Negotiate Nonstop, 24/7/365:

The modern world of AI collection platforms brings a touch of enchantment through behavioral segmentation.

This means consumers can delight in personalized repayment adventures, customized debt repayment plans, and engaging campaigns.

  1. And the best part? These platforms are always ready for a casual, give-and-take negotiation to reach the perfect solution or agreement, anytime – day or night, with ZERO employee involvement! Think of it! Jeda, your AI powered collector, doesn’t require, time-off, breaks, bonuses, empathy, a company cafeteria… ASTOUNDING! [IOUumpire.com ]
  2. Predictive Analytics: AI algorithms can analyze consumer data to predict payment behavior, enabling call center employees to focus on consumers with the highest likelihood of repayment.
  3. Personalized Communication: AI can help tailor communication strategies based on individual consumer preferences, increasing the chances of successful engagement.
  4. Speech Analytics: AI-powered speech analytics can analyze call recordings to identify patterns and trends, enabling call centers to refine their strategies and enhance employee training.
  5. Automated Customer Segmentation: AI can automatically segment consumers based on their risk profile, allowing for more targeted and effective collection strategies.
  6. Chatbots and Virtual Assistants: AI-driven chatbots and virtual assistants can handle routine inquiries and payment arrangements, freeing call center employees to focus on more complex cases.
  7. Optimized Call Routing: AI can direct calls to the most appropriate agent based on the consumer’s profile and the agent’s expertise, ensuring a more efficient and effective debt collection process.
  8. Natural Language Processing (NLP): AI-powered NLP can analyze written and spoken communication, helping call center employees better understand consumer sentiment and respond accordingly.
  9. Real-Time Performance Monitoring: AI can monitor employee performance in real time, providing instant feedback and suggestions for improvement.
  10. Automated Compliance Monitoring: AI can help call centers to maintain compliance with debt collection regulations by automatically flagging potential violations and providing guidance on corrective actions.
  11. Data-Driven Decision Making: AI can process vast amounts of data quickly, providing call center managers with actionable insights to make informed decisions on staffing, strategies, and resource allocation.

Conclusion: Embracing 24/7/365 AI to Empower Call Center Employees and Enhance Debt Collection

Incorporating AI-powered platforms into call center operations will improve the debt collection process significantly.

By leveraging the capabilities of artificial intelligence, call centers can collect and negotiate 24/7/365 with zero human involvement, optimize their workflows, enhance employee performance, and ultimately achieve better results in collecting bad debt from consumers.

Embracing AI technologies will provide call center employees with the tools and insights they need to excel in the art of persuasion and navigate the challenging world of consumer debt collection.

  • Brainstorming
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  • Grab a copy of our “bible”
  • Engage us for collaborating
  • Online Model
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  • Tribal Model

Ready to learn more about how to start or improve your subprime consumer loan business? 

We strongly suggest you pick up a copy of our 500-page Manual: “How to Loan Money to the Masses! $150.00 will be delivered to your Inbox immediately.

How to start a payday loan business, an installment loan business, a car title loan business...

Are you searching for help to launch or improve a consumer loan business?

Do you want to find out how to enter “The Business of Lending to the Masses?”

Jer Ayles: https://www.linkedin.com/in/jerryayles

Twenty + years. Expert in high-risk payday, installment, car title, tribe [TLE], and unsecured lending industries.

Consultant & go-to guy for startups and founders. Expert with both Online and storefront B2C lending strategies.

Do you need help? Solutions? Introductions? Funding? Access to a knowledge base built via “years in the trenches” rather than an academic perspective?

Have you been investing countless hours talking to the wrong people?

Jer at Trihouse Consulting is your Co-Founder, consultant, investor…

Start-ups in installment, payday loan, car title lending, line of credit… Storefront to Online transition is my specialty.

08
Mar

Interest Rate Caps Make Loans Less Available to Subprime Borrowers

Illinois’ imposition of an all-in annual percentage rate (APR) cap of 36% on loans under $40,000 from nonbank and non-credit-union lenders resulted in fewer loans being available to subprime borrowers.

Nearly 80% of respondents in an online survey of small-dollar credit customers in Illinois conducted about nine months after the imposition of the Illinois rate cap answered that they would like the option to return to their previous lender.

This is according to a study by Gregory Elliehausen, J. Brandon Bolen, and Thomas W. Miller Jr. that analyzed credit bureau data from Illinois and Missouri.

The study found that interest rate caps make loans less available to subprime borrowers, contrary to the belief that caps make loans cheaper for necessitous individuals.

The study found that the number of unsecured installment loans to subprime borrowers decreased by 44% in Illinois in the six months following the imposition of the 36% interest rate cap.

This resulted in subprime borrowers being unable to replace the loans they lost that were made by finance companies.

Banks and credit unions, which were exempt under the Illinois law, did not materially increase the number of loans they made to subprime borrowers in the same period.

Subprime borrowers reported being unable to borrow money and being unable to pay one or more bills since March 2021.

Nearly 80% of respondents in an online survey of small-dollar credit customers in Illinois conducted about nine months after the imposition of the Illinois rate cap answered that they would like the option to return to their previous lender.

More than 90% indicated that their previous loan had helped them manage their financial situation at the time of the loan.

The study found that binding interest rate caps create loan deserts for some loan amounts, where there is demand but no supply.

Small-dollar loans require a high interest to generate the revenue needed to cover the considerable fixed costs for originating, servicing, and collecting these loans.

The study suggests that lawmakers must fully understand and accept that their actions have consequences for consumers.

Subscription maybe required. 

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08
Mar

Loan Management Fees Got You in a FUNK?

Should you stay or should you go?

Loan management software for lenders: payday loans, car title loans, installment loans, line-of-credit loans, subprime loans

Hey there Lender,

Hope you’re doing great and drowning in a sea of loan requests!

We want to chat with you about something that’s been blowing up our phones lately – those pesky Loan Management Software [LMS] vendors and their outrageous fees!

Seems like every Tom, Dick, and Harry are upping their prices, and it’s not just one, but several!

What gives, right?

We know that changing your operating software is no small feat. It’s like trying to teach your grandpa how to use Snapchat – not easy!

You gotta think about data transfers, retraining your staff, and making sure the new software can actually do what you need it to do. It’s a whole ordeal!

But hey, if you can save 20-40% on your current software fees and still get the job done, why not give it a shot?

We know that being in the business of lending money to the masses is tough.

You gotta have the best tools, be super sophisticated, and make smart decisions about where you put your money.

It’s like playing chess, but with real money and no cute horses.

We’ve got some friends in the LMS industry who are 100% focused on our line of work, and they’re dying to meet you.

They’ve got some seriously sweet deals that might just make your day. And if you fill out our minimalist form below, we’ll do the intro and get out of your hair!

You can make an informed choice to stay or jump ship, and we’ll even earn a few shekels for our trouble while you shift some SERIOUS bucks to your bottom line!

It’s a win-win, baby! What did the Big Red Man say? “What’ve you got to lose?”

So what do you say, Lender? Wanna save some dough and improve your ROI? Let’s do this thing!

To our futures and your bank account!

Jer, Miro, and the Team

Fill out my online form.
06
Mar

The Debt Collector’s Secret Weapon: The Robotic Persona

Payday Loan Debt Collector at work

AI Powered Debt Collection

Once upon a time, there was a debt collector named John.

John had made a name for himself in the industry by offering loans to people with bad credit, but he secretly feared that he wasn’t cut out for the job.

Every time John tried to call a borrower to ask them to pay off their loan, his palms would start to sweat, and he would stumble over his words.

He was so consumed by imposter syndrome that he began to avoid his borrowers altogether, hoping they would simply pay their debts.

One day, John’s boss called him into his office to discuss the high number of non-performing loans on John’s books.

John felt a knot form in his stomach as he sat down across from his boss, fearing that he would be fired on the spot.

But to John’s surprise, his boss had a unique solution to his problem. He suggested that John pretend to be a robot when calling his borrowers to collect payment.

At first, John was skeptical.

But his boss explained that robots don’t have emotions, so they can’t experience imposter syndrome.

Plus, if John pretended to be a robot, he could use a monotone voice and avoid any awkward conversations with borrowers.

John decided to give it a try.

The next day, he donned a metallic jumpsuit and put on a robotic voice. He dialed the first borrower on his list and waited for the voicemail to kick in.

“Hello, this is Robo-Lender,” John intoned in his monotone voice. “You have an outstanding debt that needs to be paid immediately. Failure to comply will result in the activation of our debt collection protocols.”

To John’s surprise, the borrower actually called back. And when they did, John kept up the robotic act, even throwing in a few “beep boops” for good measure.

To his amazement, John found that pretending to be a robot actually made it easier to collect payments from borrowers.

He no longer felt the same anxiety when making collection calls, and his borrowers seemed to respond better to the robotic persona.

In fact, John became so good at his robotic act that his boss even suggested he start wearing a robot costume to work.

From that day forward, John became known as the “Robo-Lender” at his company.

And while he still struggled with imposter syndrome from time to time, John knew that as long as he had his robot costume and monotone voice, he could face any debtor with confidence.

02
Mar

High Salaries, Low Savings: The Shocking Truth About Americans’ Paycheck-to-Paycheck Living.

A Lending Club Study reveals:

  • 28%: Share of consumers earning more than $200,000 who live paycheck to paycheck
  • 59%: Share of paycheck-to-paycheck consumers with issues paying their monthly bills that noted significant rises in prices for utilities in the past 12 months
  • 48%: Share of consumers living paycheck to paycheck with issues paying bills who pay for health insurance

“Being a money lender is like being a genie, except instead of three wishes, I give people the power to buy things they don’t need with money they don’t have.” TheBusinessOflending.com

45% of individuals earning more than $100,000 per year lived paycheck to paycheck.

56% of USA consumers don’t have access to $400 when faced with a sudden emergency!

Demand for credit continues unabated! [Other than housing because potential home sellers don’t want to give up their <3% mortgage interest rates!]

“As a money lender, I get to say the two words every person wants to hear: ‘approved’ and ‘money’ (and maybe ‘free pizza’).” PaydayLoanUniversity.com

The Study also highlights that individuals in the lower range of the upper-income bracket are particularly at risk of facing paycheck-to-paycheck living. A staggering 54% of consumers earning between $100,000 and $150,000 annually, more than double the median personal income in the U.S., are living paycheck to paycheck. This figure represents a 7 percentage-point increase from July 2022.

The Study’s results indicate that many Americans struggle to make ends meet despite high salaries. Several factors, such as rising inflation, increasing living costs, mounting debt, and a lack of financial planning, contribute to this.

The post-COVID-19 pandemic era has significantly impacted people’s finances, causing them to shift their spending and savings habits. Many consumers strongly desire to break free from the feeling of being confined during the pandemic, both physically and financially.

The Bottom Line?

Access to small-dollar loans is crucial for millions of households across the country.

For many families, unexpected expenses or emergencies can quickly derail their finances, leaving them with few options.

Traditional banks and lending institutions often require lengthy application processes, high credit scores, and collateral, making it difficult or even impossible for those needing the money they require.

On the other hand, small-dollar loans offer a viable alternative for those struggling to make ends meet.

With easy and accessible application processes, lower credit score requirements, and more flexible repayment terms, small-dollar loans provide a lifeline for households needing financial assistance.

We can help millions of families manage unexpected expenses and navigate challenging times by providing access to small-dollar loans.

Here’s the link to the Lending Club Study: Click to Access

Here it is! Our newly updated 500+ page Manual. We thoroughly explain step-by-step how to start & operate a profitable consumer loan business. 

If you doubt our “Bottom Line,” here’s a link to a Study and commentary by Ballard Spahr about the impact of the passage of a 36% APR cap in Illinois: Click to Access

25
Feb

Loan Shark Larry Resume

Greetings, financial world! I’m the copywriting “shark” you’ve been waiting for. My writing is as sharp as my teeth and as sleek as my fins. I am the predator of financial copywriting, and I take no prisoners.

Name: Loan Shark Larry

Objective: To sink my teeth into a career as a financial copywriting shark.

Education:

  • A. in Bitingly Witty Writing from Shark University
  • Master’s in Money-Making Copy from the School of Hard Knocks

Experience:

  • 5+ years experience as a loan shark, writing persuasive copy that sinks its teeth into consumer wallets
  • Expertise in payday loans, car title loans, installment loans, and personal loans (I’ve been around the block a few times)
  • Proven track record of increasing conversions by using humor, creative storytelling, and a touch of fear (just enough to keep them coming back for more)

Skills:

  • A bite that’s worse than my bark
  • Ability to stay afloat in a sea of financial jargon
  • Strong knowledge of SEO and SEM (I know how to swim to the top of the search results)
  • Proficient in Microsoft Office (I’m not afraid to use Excel to crunch numbers)

Personal Interests:

  • Swimming with the sharks (literally and figuratively)
  • Telling fishy jokes (they’re always a-dolphin-able)
  • Chasing after the big bucks (I’m always angling for a raise)

References:

  • Available upon request (but be warned, I may have to “loan” them to you)

Disclaimer: This resume is intended for entertainment purposes only and any similarities to actual loan sharks is purely coincidental.

 

Email me. We can schedule a call & explore …

  1. Want to make a splash in the lending industry? Hire Loan Shark Larry and watch the competition flounder! My copywriting is as powerful as a tidal wave, and I’ll make sure your business is riding the crest of success. So what are you waiting for? Let’s dive in and make some waves!

05
Feb

Entrepreneurs: Little-Known, Insider Benefits of Starting a Consumer Loan Business

how to start a consumer loan business

There are several types of consumer loan products available for subprime borrowers, who typically have lower credit scores and may struggle to secure loans from traditional banks and financial institutions. Some of the most common types of consumer loan products for the subprime market include:

  1. Payday Loans: Payday loans are short-term, high-interest loans that are typically due on the borrower’s next payday. These loans are often used for emergency expenses and are available without a credit check.

  2. Car Title Loans: Car title loans are loans that use the borrower’s car as collateral. The lender holds onto the car’s title until the loan is paid in full. These loans typically have high interest rates and are designed for borrowers who need quick cash and have a car they can use as collateral.

  3. Installment Loans: Installment loans are loans that are repaid over a set period of time in fixed, regular payments. These loans are typically used for larger purchases, such as home repairs or medical bills, and are available with either secured or unsecured terms.

  4. Line-of-Credit Loans: Line-of-credit loans are loans that allow borrowers to access a set amount of money, up to a certain limit, whenever they need it. The borrower only pays interest on the amount they borrow, and the loan is typically repaid over time with interest.

  5. Rent-to-Own Loans: Rent-to-own loans are loans that allow borrowers to rent a product, such as furniture or electronics, for a set period of time, with the option to purchase the product at the end of the rental period. These loans are typically available to subprime borrowers who may not be able to secure other forms of credit.

Millions of consumers living paycheck to paycheck!

According to a recent survey, about 44% of U.S. households do not have $500 in savings to cover an unexpected expense or financial emergency.

This means that nearly half of American households are living paycheck to paycheck and are vulnerable to financial instability when a sudden unexpected expense occurs.

The lack of savings can make it difficult for households to cover emergencies like car repairs, medical bills, or job loss, leading many to turn to high-interest loans or credit card debt to make ends meet.

Starting a consumer loan business can be a lucrative opportunity for entrepreneurs, as it provides several benefits:

  1. High demand: There is a high demand for consumer loans, as people are often in need of short-term or long-term financial support. This high demand can lead to a steady stream of business and revenue.

  2. Flexibility: Consumer loan businesses can offer a variety of loan products and services, giving entrepreneurs the flexibility to choose which types of loans to offer based on their target market and business strategy.

  3. Scalability: A consumer loan business can be easily scaled as demand grows, allowing entrepreneurs to expand their operations and increase their revenue.

  4. Potential for high returns: Consumer loans often come with high-interest rates, which can result in high returns for the business owner.

  5. Unique selling proposition: By offering a wide range of loan products and services and by differentiating themselves from other lenders in the market, consumer loan businesses can establish a unique selling proposition that appeals to their target market.

  6. Opportunity to help others: Consumer loan businesses have the opportunity to make a positive impact on people’s lives by providing financial support and assistance when they need it most.

Starting a consumer loan business does come with some challenges, such as regulatory compliance and managing risks, but with careful planning and execution, combined with a collaboration with the Trihouse Consulting Team, the benefits can far outweigh the challenges.

Entrepreneurs Investors

05
Feb

Insider Difference Between Payday Loans & Installment Loans

Think of a payday loan like borrowing a little bit of money from a friend to buy a toy and then giving the friend all the money back the next time you get paid.

An installment loan is like borrowing a bigger amount of money from a bank to buy a bicycle and then paying the bank back a little bit each month until you’ve paid it all back.

A payday loan and an installment loan are both types of loans, but they differ from each other.

A payday loan is a short-term loan that you are supposed to pay back with your next paycheck. This means that you borrow a small amount of money and have to pay it back very quickly, usually within a few weeks.

On the other hand, an installment loan is a loan that you pay back in smaller pieces, or installments, over a longer period.

This means you can borrow more money and don’t have to pay it back all at once as you do with a payday loan. Instead, you make regular payments until the loan is paid off.

An installment loan and a payday loan both have their own benefits and drawbacks.

Benefits of an installment loan:

  • Borrow larger amounts of money: With an installment loan, you can borrow more money than with a payday loan.
  • Longer repayment period: An installment loan gives you more time to pay back the money you borrowed, usually several months to a few years. This makes the payments more manageable and less stressful.
  • Lower interest rates: Interest rates for installment loans are generally lower than for payday loans. This means you will end up paying less in the long run.
  • Better for credit score: Making regular, on-time payments on an installment loan can help improve your credit score.

Benefits of a payday loan:

  • Quick and easy: Payday loans are often quick and easy to get, making them a convenient option when you need money fast.
  • No credit check: Some payday lenders don’t check your credit score, which can be helpful if you have a low credit score.
  • No collateral: You don’t have to put up any collateral, like your car or house, to get a payday loan.

It’s important to consider your personal financial situation and the terms of the loan before choosing between a payday loan or an installment loan. In general, an installment loan may be a better choice if you need to borrow a larger amount of money and want more time to pay it back. However, if you need money quickly and have a stable source of income to repay the loan, a payday loan might be a good option.

For Entrepreneurs:

Would you like to learn more about the benefits of entering the consumer loan industry? As a lender? An investor? 

11
Jan

Why Audacious John Chose a Payday Loan vs. a Bank “Loan”

Once upon a time, a consumer named John found himself in a difficult situation.

He had written a check for $100 to pay for an unexpected expense but soon realized that the check would bounce because he didn’t have enough money in his account to cover it.

He knew that if the check bounced, he would have to pay a $35 Non-Sufficient Funds (NSF) fee, adding even more financial stress to an already difficult situation.

Feeling concerned, John started looking for a way to borrow the $100 he needed to cover the check.

He came across a payday loan company that offered him a $100 loan with an interest rate of 15% and a repayment period of 14 days.

John knew that the interest rate was high and that he would have to pay back $115 in 14 days.

However, after considering all his options, he realized that taking out the payday loan was the best decision. He thought it was wiser to pay $115 in two weeks than to pay a $35 fee in one day.

John applied for the loan and was approved in minutes. His loan proceeds were deposited into his bank account within minutes!

He used the loan to cover the check and avoided the NSF fee.

He knew that his income was stable enough to pay back the loan in 2 weeks, and he made sure to budget accordingly.

Two weeks later, John was able to pay back the loan on time, and he was relieved that he had avoided the $35 NSF fee.

He felt proud of himself for making the intelligent decision to borrow the money he needed and for being able to pay it back on time.

He learned the importance of considering all options and the potential consequences before making a decision and also the importance of budgeting.

He also made sure to have emergency funds for unexpected situations in the future to avoid having to take out a payday loan again.

Typical Bank Overdraft Example (NSF’s are really payday loans by banks and credit unions!)

Overdraft Example:

100 X 365/6 X(170/100-1) = APR

6083.33X.70 = 4,258.33% APR

Total cost to client = $175.00

 

If a bank customer overdrafts their account by $100 they can be charged an initial $35+ Overdraft Fee for the 1st day, and an Extended Overdraft fee of $35 on the 6th day. 

Typical Payday Loan Example:

John borrows $100 for 14 days

Payday loan lender advances $85.00

On payday, John pays the lender a $15.00 fee + the $85 loan principal.

 

 

100 X 365/14 X (115/100 – 1 = APR

2607.14 X .15 = 443.21% APR

Total cost to client = $117

→ Limited time inflation relief pricing: Save $147.00

Limited Time Inflation Relief Pricing $147 Off ends in

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