Insider Difference Between Payday Loans & Installment Loans

Posted by Team Jer / Opportunities

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?

07
Jan

Fast Cash for Your Emergencies: Payday Loans

Posted by Team Jer / Strategy

10 Reasons Consumers Living Paycheck to Paycheck Need Access to small Dollar Loans

To cover unexpected expenses, such as car repairs or medical bills, that cannot wait until the next paycheck.

To avoid late fees or overdraft charges on bills that cannot be paid on time due to a lack of funds.

To prevent the need to borrow money from friends or family, which can strain relationships.

To avoid having to sell personal possessions or valuable items to raise money in a pinch.

To avoid having to choose between paying bills and buying necessities, such as food or medication.

To avoid having to use credit cards, which can result in high interest charges and long-term debt.

To avoid having to take on more work or longer hours, which can be physically and mentally taxing.

To avoid having to rely on high-interest alternative lending options, such as pawn shops or car title loans.

To avoid having to take on additional part-time or freelance work, which can be unpredictable and unstable.

To avoid having to dip into savings, which can be detrimental to long-term financial security.

Our Philosophy

26
Dec

Profits: 2023 Demand for Car Title, Installment & PDLs

Posted by Team Jer / Opportunities, Profits

A new CFPB study revealed, "Between our 2021 and 2022 surveys, use of payday loans, installment loans, and car title loans increased dramatically nationwide! Demand for car title loans, in particular, rose nearly 3%."

The financial stability of Black and Hispanic consumers, renters, and under-40s suffered dramatically between 2021 and 2022, said the CFPB.

The anticipated recession and higher unemployment in 2023 do not bode well for this demographic!

“Despite a tight labor market, pandemic-era relief programs, including expanded unemployment benefits and stimulus checks, and lower consumer spending, financial well-being has returned to where it was in 2019,” the CFPB report revealed.

“Unemployment remains low in December 2022, but many consumers are not prepared financially for unemployment, despite building large cash buffers and paying down debts during the first years of the pandemic. If they lost their main source of income, 37 percent of households could not cover expenses for longer than one month by using all sources, including savings, selling assets, borrowing, or seeking help from friends or family; 51 percent of Black and Hispanic households could not cover their expenses for longer than a month.

During a downturn, unemployment often lasts more than one month, and unemployment benefits can take several weeks or more to be deposited, leaving many households financially vulnerable to an unemployment period.”

[As a result, we lenders are tightening up our underwriting considerably. This strategy is reflected in our “loan-to-value” [LTV] metrics, our “ability to repay” calculations, and multiple KPIs as discussed in our Manual focused on “Lending to the Masses.” Car title loans, installment loans, and payday loans.]

Advertiser of the Month

Credit card debt has increased since June 2021 after falling early during Covid for all income groups.

“Meanwhile, one in eight households experienced lost income from unemployment or reduced work hours. Even more common, 34 percent of households experienced a major unexpected expense from vehicle repair or replacement, 31 percent a significant unexpected medical expense, 30 percent a computer or mobile phone replacement or repair, and 27 percent major household repairs.”

Here’s a link to the complete Study: CFPB “Making Ends Meet.”

11
Dec

Extreme Consumer Loan Business Profits?

Posted by Team Jer / Calif, Florida, Profits, Texas

Cash advance and payday loan businesses can offer superior returns for an entrepreneur focused on lending money to the masses.

Sure! We charge what are perceived to be high-interest rates because our customer acquisition costs and our default rates can be SCARY.

What to do? You simply build these metrics into your business plan.

You integrate with state-of-the-art customer acquisition channels, loan management software, and underwriting platforms.

The interest rates we charge enable us to offer the 60% of USA households living paycheck to paycheck access to money when faced with a sudden financial challenge.

Do you know that 38% of households earning $100,000/annually are living paycheck to paycheck as well?

In today’s economic environment, credit card companies are charging 29.95% APR. AND THEY HAVE LEVERAGE! Credit card companies report consumer payment history to the three major credit bureaus. We do not!

Cash advance, payday loan, installment loan and car title loan companies can be profitable. However, it is essential to note that the profitability of a payday loan/consumer loan business will vary depending on many factors, such as:

The amount of competition in the area.

The demographics of the area served.

Are you funding loans via the Internet, a brick-and-mortar or a “blended” model?

Internet-originated consumer personal loan defaults are generally double that of storefront locations.

The efficiency of the business’s operations. Meaning customer acquisition costs, underwriting costs, servicing costs, processing costs, and collections costs…

The overall state of the economy.

The state the consumer/borrower resides in.

Many states have regulations that limit the interest rates that payday loan businesses can charge, which will impact the business’s profitability.

For example, short-term consumer loan rates for borrowers residing in Florida are $10/$100 loaned. On the other hand, Texas is as much as $30/$100 loaned. California payday loans are $15/$100 loaned.

The ROI is strongly impacted by the types of loan products the Lender offers to the 60%+ of USA adults living paycheck to paycheck.

Personal loans
Car title loans
Installment loans
Amortized loans
Loans that depend on tips, accelerated ACH deposits
BNPL products that depend on merchant fees to earn a profit
Other

[A recent study revealed Buy-Now-Pay-Later [BNPL] companies are charging an average 380% APR when all the extra fees, tips, ACH acceleration fess… are computed!]

Achieving a 30% gross on your street money is typical. Many balance sheet lenders earn more. Many inefficient lenders earn less. As they say, “It depends!”

“Inflation Relief Price: $150.00

Our 500+ page Course: “How to Loan Money to the Masses Profitably.” Immediate PDF delivered to your Inbox.

08
Jul

How to Start a Consumer Loan Business: $297.00

Posted by Team Jer / Courses

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

The Course: “How To Start/Improve a Consumer Loan Business.”

Our 500+ Page Manual: $297.00
Topics covered:
How to launch a consumer lending business
Installment Loans
Payday Loans
Small Dollar Loans
Car Title Loans
Personal Loans
Signature Loans
Non-Secured Personal Loans
StoreFront Lending
Internet lending
Smartphone lending
Licensing? State/Province
What loan management software to use?
Capital required?
Profitability?
Collections?
Borrower Underwriting?
Store & Internet Lending tactics & strategies
Sample contracts, License apps…
Tribe model [“sovereign nation”]
Texas CSO/CAB model
$297.00 PDF Immediate Download
100% Refund Policy [If you are not happy FOR ANY REASON with our Course, simply email TrihouseConsulting@gmail.com for a 100% refund.]

If you’re worn out spending hour upon hour searching Google for consumer loan business strategies, know-how, software, licensing, consumer credit reporting, sample contracts, collection tactics, profitability, how much start-up capital you need, anticipated default metrics, and on and on and on… Our “Bible” delivers ALL THESE ANSWERS AND MORE! Answers to how profitable are they? How much do these businesses earn? Do you need a license? We update our “Bible” every 3 months.

16
May

A 36% APR on a 2-week loan = customers pay $1.38 per $100 borrowed.

Posted by Team Jer / APR's

Learn how to start a consumer loan business! Your inventory is MONEY! What could be better? Zip!

Perspective

By: Jer Ayles

FALLACY #1: Payday lenders, car title lenders, installment lenders, and all small-dollar loan lenders can earn a profit under a state-imposed 36% annual percentage rate cap.

FALLACY #2: Small-dollar loan customers should simply go to a bank rather than me. My worst critic knows that banks DO NOT WANT my customer! Banks think my customer is a giant PAIN! My customers are not comfortable inside a bank. If you’ve visited a bank lately, you know it requires an act of god to even talk with a banker. Fuhgeddaboudit!

FACT: A report by Professor Victor Sta ngo, “…a 36 percent cap eliminates payday loans. If payday lenders earn normal profits when they charge $15 per $100 per two weeks, as the evidence suggests, they must surely lose money at $1.38 per $100 (equivalent to a 36 percent APR.)”–Economists Robert DeYoung, Ronald Mann, Donald Morgan, and Michael Strain, Federal Reserve Bank of NewYork

WRONG!

So-called consumer protectionists and competitors [think pawn shops, banks, credit unions, and lenders servicing 640+ FICO consumers via long-term, $3000+ loans] lobby hard for capping interest rates at 36%.

A 36% Annual Percentage Rate Cap in the real world =

$100 borrowed would generate $1.38 per month in interest.
That’s equivalent to $.10 per day.
A $100,000 “book” [portfolio – “money on the street,” would earn $36,000 per year in top line revenue.
In other words, $36,000 per year or $3000 per month GROSS.

The Reality?

I cannot pay my storefront rent with $3000 in monthly fee revenue with a $100,000 portfolio!
I need 2.5 employees. [How much $$$$ in wages and benefits is that in your locale?]
My average cost of capital is 12%.
Bad debt. My net chargeoffs are 18%.
My CAC is $185.
Additional line item expenses include insurance, security, underwriting, phones, utilities, licensing, state audit fees, collections, text messaging fees, and loan mngt. fees, office expenses…
Taxes.
Accounting, legal & professional fees.
Unlike credit unions, various community groups & banks, my business is NOT subsidized.
While my competitors technically provide <36% loans to a limited pool of subprime consumers, they evade the 36% APR cap by selling expensive insurance products to their customers, products that are NOT included in the loan’s APR calculation. The result? 180%+ APRs.
My customers WANT & NEED my loan products! They know my loan product is expensive. I tell them it’s expensive. The fees I charged are plastered all over the walls of my store and on my website. My team doesn’t hide our fees. EVER! There is no need.
My customers desire loans of $100 – $500. Who is going to take a chance on them? Not a bank? Not a credit union. Their friends and family, who my customer is too embarrassed to ask for a loan, are OFTEN in the same boat. Where to turn in an emergency? Food, Car repair, medicine, rent…

Limited time "inflation Finder Discount!

500+ page Course: “How to Loan Money to the Masses Profitably.” Immediate PDF delivered to your Inbox.

10
Feb

How-to: Installment Loans for the Subprime Demographic

Posted by frank / Collections, Nevada, Strategy

There is a national trend by regulators to mandate a 36% APR [Annual Percentage Rate] cap throughout the USA.

Many national Lenders have been transitioning to a multitude of financial loan products in an effort to continue to serve subprime borrowers while still achieving superior ROI. Witness Avant, CURO, WRLD, ENVA… You only need to refer to their latest earnings call to comprehend the extent of this transition away from single-payment products. Enova’s progeny is CASHNETUSA.com back in the late ’90s. At the time, they offered singularly payday loans having 400% – 700% APR payday loans. As per their latest Q4 earnings call, these single payment [payday loan] products made up a mere 2% of loan originations. Obviously, they see the writing on the wall.

DO YOU?

Nevada, in addition to approximately 25 other States, has Implemented a state database. This demonstrates a death knell for the single payment product!

Luckily, we Lenders have time to evolve our Loan product offerings AND, more importantly, integrate with Fintech platforms that enable us to reduce headcount, and employ artificial intelligence [AI] to acquire, underwrite, service & collect funds without the aid of human intervention; thus reducing our G & A expenses. [Examples: IOUUmpire.com for 24/7/365 debt negotiation & IWVPro.com for wages & income verification.]

DO YOU WANT TO SCALE YOUR BUSINESS?

Grab a copy of our latest version of “How to Lend Money to the Masses Profitably.” 500+ pages of real-world, how-to start, scale, improve and succeed lending cash to the 50%+ of USA households who are FAST running out of money and cannot access $500 cash in order to solve a sudden financial emergency. [Fix their car, keep the lights on, pay for a prescription, make payroll for their construction crew until paid by the homeowner…] For a mere $297.00, you can download our 500+ page PDF and enter/improve/scale a consumer loan business! The business of lending to the Masses. The oldest profession 🙂

17
Oct

How to Loan Money to the Masses Profitably

Posted by Team Jer / Strategy

Consultant: The Business of Lending to the Masses

To be successful as a lender – or in any other entrepreneurial endeavor – you only have to be good at a few things:

· Picking the right business niche

· Raising money

· Hiring good people

· Ability to iterate through your challenges

· Be Bold. Go where others fear to tread.

Let’s get real! Lending money to the masses can be very profitable!

We are rapidly becoming a nation of “haves” and “have not’s.” The average U.S. worker is paid $23/hour. In real terms, $23/hour has the same purchasing power as $6/hour 40 years ago. The result? Staggering household debt! [Yes, I know! Many of you are reading this Course as you sit in Australia, Europe, the Islands, China… It’s the same theme everywhere. The business of lending money.]

80% of the U.S. is living paycheck to paycheck! [CareerBuilder.com] One in three people are subprime borrowers.[<620 Credit Score.]

Two in five U.S. adults do not have access to $400 cash immediately. Not in a bank account, not on a credit card, not under the mattress… They’ve already borrowed from friends, family, their church… Nowhere to turn but to YOU!

What’s this mean to you? OPPORTUNITY!

The team at Trihouse will teach you how to loan money to the masses without getting your ass handed back to you. Yes, for many of you, reading this tomb will be PAINFUL! It’s the price for entry and success.

The loan products discussed here are installment loans, payday loans, signature loans, car title loans, personal cash advances, merchant cash advances, business to business loans… Call them what you may. All of them can be very profitable.

Real-world example?

In California and Texas, we’re charging $15 to $30+ for every 14-day loan we make. [Depends on the state licensing model used or the Native American Tribe we collaborate with.]

That’s a 400%+ annual percentage rate (APR) for a borrower to use our money for two weeks!

We’ve had stores reach $10,000 in loans after only being opened 3 weeks; within a year, $100,000 on a good week and generating $50,000/month in fees.

Online lending?

Sure. Lenders have costs. Payroll costs, utility costs, website costs, merchant processing, rent, legal, taxes… but you get the picture.

A lender’s inventory is MONEY!

It’s not flowers that die on you. It’s not food that rots. It’s MONEY, MOOLAH, COIN, DINERO, SCRATCH, DOLLARS, EUROS… NICE!!

DONE! I’ve established that the business of lending money to the masses can be very profitable!

Raising Money

This is a mindset. It’s about the presentation. Practice getting good at distilling your idea into a bite-sized amount. Get your business launched.

I’m not talking about immediately achieving a huge scale. Just get your loan business open for business and fund a few loans. Storefront, Internet, monoline, combo… just fund a few loans!

Next?

Friends, family, peers, members of your network… will find out what you’re doing.

They will want to learn more.

Don’t be shocked when they say something along the lines of, “I have $20K sitting in the bank earning 1% per year before taxes and inflation. Could you put my money to work in your new business?

Of course, you can! Offer them 6%, 8%, 10%+ per year. You can afford it when you’re grossing 500%+ APR’s on your loan portfolio!

NOTE: Not sure how I’m calculating these APRs? Go here: Sample APR Calculations

Hiring Good People

If you’re good at raising capital, you can hire people to do everything else.
You can hire a CEO.
You can hire a lawyer.
You can hire an experienced customer service representative.
You can buy “off the shelf” loan management software.
You can subscribe to a sub-prime consumer credit reporting service [CRA].
You can hire great people to do any part of this business you choose to.

YOU GET MY POINT!

To hire right, you need a big funnel. You have to sort through a ton of leads.

You need a system; an on-boarding process.

You’ve got to learn how to do this! [This intel is in this Course.]

The quality of your life is about the people around you.

Everything bad that happened to you in the last 10 years did not happen in a bubble.

Someone either DID or DID NOT do something to you.

That’s life.

Most problems in life are people problems.

We let the wrong – or right – people into our lives.

In business, there are some whack jobs! Don’t let them in!

Now go out and BE BAD! Jer – TrihouseConsulting@gmail.com

Jer Ayles, Consultant: How to Start a Consumer Loan Business

Published by

Jer Ayles

Consultant: The Business of Lending to the Masses

How to Loan Money to the Masses Profitably. A few words about small-dollar lending in today’s environment by Jer Ayles, Partner at Trihouse Consulting. We began our journey as Lenders! We’ve “worked” deep in the weeds. Zero academics here!

car title loans installment loans payday loans

03
Oct

Who Gets Payday Loans Today

Posted by Team Jer / Strategy

PAYDAY LOANS: THE BUSINESS OF LENDING TO THE MASSES

Several industry-sponsored studies have surfaced recently to determine who gets payday loans today. They are interesting but offer few surprises. The studies simply emphasize it’s the same demographic with a twist. Gig Workers are now in the mix. Again, rather obvious.

In a nutshell, THERE IS NO MAGIC to identifying the payday loan demographic. Payday loan borrowers are the 99%. Retail, health workers, service workers, office, administrative, gig…

Here are a few takeaways.

Payday loans are used by people who need CASH FAST and lack other financial options for repairing their car, keeping the lights on, paying for prescriptions, filling the pantry… in other words, unexpected expenses.

So, what’s good about payday loans? Virtually anyone who can breathe & has proof of a regular income and a bank account can gain access to cash when facing a sudden cash crunch.

What’s bad about payday loans? They are not amortized. The payday loan borrower must come up with the loan principal on their next payday.

The majority of payday loan borrowers do not abuse this feature. Say they live in California. They borrow $100. In reality, the payday loan lender advances the borrower $85. two weeks later, on payday, the payday loan borrower returns to the payday loan brick-n-mortar store or the internet portal and pays back the $85 loan principal + $15 fee. No biggie. That’s the legal rate in California for payday loans.

But, of course, there are always borrowers on the margin who abuse this simple transaction. Two weeks go by, the payday loan borrower is still in over their head and they pay the $15 BUT fail to add any $$ towards the original $85 loan principal. This goes on for weeks! Week after week, they pay the $15. Before long, they’ve paid $300/$400+ in $15 increments and still owe the payday loan lender the original $85 loan principal. NOT A HAPPY ENDING.

At some point, the majority of payday loan lenders implement a policy of insisting the payday loan borrower begin adding a minimum of $20/week to the $15 fee in an effort to force the payday loan borrower to pay down the loan principal. It’s simply the right thing to do!

Back to alternatives for solving the emergency financial challenges faced by potential payday loan borrowers; their ONLY alternatives are:

Friends & family [Usually, they’ve already hit up friends & family. not an option + embarrassing]
Their church [Rarely a viable alternative + embarrassing]
Bounce a check and incur a $35 NSF fee [Result is a bank “loan” having a minimum 1800% APR & potential Check System database entry. That results in their NEVER having the ability to participate in the banking system again! BAD!!]
Get a payday loan [Typically a 400% – 600% APR] online or at a Storefront location
Go without lights, car repair… – lose their job [Not a good choice], forgo that prescription [Ugh!], etc.
Go hungry/suck it up
Borrower from their employer

NOTE: Quite frankly, PAYDAY LOAN products are dinosaurs! Virtually all forward-thinking payday loan lenders have evolved to various types of “installment loans, line-of-credit loans, even buy-now-pay-later” [BNPL] forms of payment. [These BNPL financial products are often worse than old school payday loans because consumers OFTEN fail to realize the payments eventually do come due and they simply forgot! The free interest evaporates and the late fees kick in. It gets REAL UGLY fast. But, this issue is another Post.]

Fact #1: The overwhelming majority of payday loan recipients (82%) have full-time jobs. When you add the number of recipients that work part-time or are already retired, that accounts for well over 90% of recipients.
Fact #2: Payday loan borrowers work in sales, office, gig jobs, food service, and healthcare support.
fACT 3: The most common employer of payday loan borrowers is Walmart, followed by Kaiser, Target, Home Depot, major restaurant employers, Uber, and Amazon
Fact 4: The majority of payday loan recipients are employed full time
Fact 5: Payday loan borrowers use payday loans to cover the timing mismatch of having an expense coming in before the paycheck arrives to cover it.

THE BLOG

Insider Difference Between Payday Loans & Installment Loans

Posted by Team Jer / Opportunities

For Entrepreneurs:

Fast Cash for Your Emergencies: Payday Loans

Posted by Team Jer / Strategy

10 Reasons Consumers Living Paycheck to Paycheck Need Access to small Dollar Loans

Our Philosophy

Profits: 2023 Demand for Car Title, Installment & PDLs

Posted by Team Jer / Opportunities, Profits

A new CFPB study revealed, "Between our 2021 and 2022 surveys, use of payday loans, installment loans, and car title loans increased dramatically nationwide! Demand for car title loans, in particular, rose nearly 3%."

Advertiser of the Month

Credit card debt has increased since June 2021 after falling early during Covid for all income groups.

Extreme Consumer Loan Business Profits?

Posted by Team Jer / Calif, Florida, Profits, Texas

How to Start a Consumer Loan Business: $297.00

Posted by Team Jer / Courses

A 36% APR on a 2-week loan = customers pay $1.38 per $100 borrowed.

Posted by Team Jer / APR's

Learn how to start a consumer loan business! Your inventory is MONEY! What could be better? Zip!

Perspective

Limited time "inflation Finder Discount!

How-to: Installment Loans for the Subprime Demographic

Posted by frank / Collections, Nevada, Strategy

How to Loan Money to the Masses Profitably

Posted by Team Jer / Strategy

Consultant: The Business of Lending to the Masses

Published by

Who Gets Payday Loans Today

Posted by Team Jer / Strategy

How to Loan Money to the Masses

Course: How to Loan Money to the Masses

6 In 10 People Don't Have $500 cash!

That's 156,000,000 Adults!

CURO, a publicly traded lender, originates $1 Billion dollars [+/-] in consumer loans every 3 months. They have approximately a 3% market share. What's this mean for you? OPPORTUNITY!

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