THE BLOG

05
Dec

Heads Up: Debt Buyers Paying More for Our Bad Paper

Posted by / Strategy

Just a quick note. Debt buyers are in a state of frenzy. Payday, installment, car title… lenders are working their bad debt longer than normal. Why? Our subprime borrowers are sitting on a ton of cash. Our collection Team is experiencing more than usual success.

As a result, bad debt buyers are paying more for our bad debt!

If you do want to unload any bad paper you’ve been working in house, let me know. I’ll connect you direct.

Meanwhile, new loan originations continue to trend up. FOMO about omicron variant potential lockdowns, inflation, record low employment, record new business formations by sole-proprietors… continue.

December is OURS!

Jer
Jer@theBusinessOfLending.com
Jer – 702-208-6736 Cell
Jer@theBusinessOfLending.com

https://theBusinessOflending.comJer Ayles, Consultant: How to Start a Consumer Loan Business

03
Nov

Meet Me in Miami or Cabo San Lucas: November 2020

Posted by / Strategy
Jer in Miami November 6-8, Then > Cabo San Lucas Nov 9th – 14th. Sent Tuesday, November 3, 2020

 

09
Jun

Pandemics, Riots: Lending to the Masses & Baby Boomer Sellers

Posted by / Strategy

Nobody knows the future BUT, although history may not repeat, it rhymes!

The masses ALWAYS need money! This has always been the case and will remain so.

What is “The Business of Lending to the Masses” all about? Let’s get a few things straight!

How to Buy or Start a Consumer Loan Business. Why “Baby Boomers” make the best sellers.

Payday loans, pawn shop loans, car title loans, installment loans, line-of-credit loans, wage advances, loans on smartphones, car title loans… basically the same business. Some loans are collateralized and some are not.

  • YOU ARE LENDING MONEY TO THE MASSES.
  • The masses ALWAYS need money. [Read “The Ascent of Money” and “Debt: The First 5000 Years.”
  • The Chinese virus/pandemic, protests, looting… will subside. These events have ACCELERATED the move to the digital money movement.
  • Change is MOST CERTAINLY here! Job environments are changing. Work from home will increase. It’s a digital world.
  • There will NOT be another lockdown! 40 million jobs cannot be allowed to happen again!!
  • Our recovery will be V-SHAPED. The Federal Reserve is flooding our economy. $3Trillion in stimulus and 75%+ has not even “hit the streets” yet!
  • The use of CASH – dollar bills – for anything will continue to diminish. Doubt me? Ever been in line when a Chinese or Nigerian needs to pay for ANYTHING while visiting the USA and they COMPLAIN about having to have dollar bills? They bitch.
  • Commerce, mindset, jobs… will not return to the “old normal.” The tsunami of liquidity about to overwhelm our economy will create boundless opportunities, speculation, innovation, prosperity, and dramatic increases in employment.
  • Inflation, at least for the next 18+ months will not be an issue. The world needs the dollar! Everything is paid for in dollars.
  • Continued pressure by regulators, politicians, lawyers. consumers… will result in downward pressure on lender fees. 36% max APR’s anyone?
  • The Media will continue to distort EVERYTHING. “Click Bait” is the name of their game. That’s how they make MONEY.
  • Tech is enabling lenders to minimize brick-n-mortar footprints, reduce CAQ [customer acquisition costs], headcount to perform consumer onboarding, servicing, underwriting, verifying employment status, bank account verification, collection processes… yielding qualified borrowers at lower servicing costs.
  • MOIP [Money Over Internet Protocol] is here today. Both lenders and consumers can participate in someday funding – credits/debits – through a variety of payment channels [discussed in our Manual].
  • A plethora of banks, 3rd party vendors, cloud platforms, lead providers, and capital sources can easily be integrated via API’s today thus negating the need for a Lender to “build” all the pieces required to loan money to the masses while continuing to earn a superior  ROI.
  • Online lending will replace brick-n-mortar lending. Smartphones will lead the way!
  • Never forget! Your best new customers are your old customers.

Hundreds of thousands of Baby Boomers” own small businesses today. Many of them are money Lenders, pawnshop owners, money transmitters, currency exchangers… They OFTEN have no one to sell their businesses to! Their kids don’t want them. Their grand-kids dream is not to become a money lender. Their only option? Sell! However, buyers are scarce. So… the only option is for the Boomer to close her business. [Often, it’s the significant other who has to deal with selling/closing the business.] 90% of businesses simply close their doors rather than sell.

What does this have to do with you, Dear Reader? OPPORTUNITY!

Let’s be honest. A majority of these Boomers don’t know what TikTok is! Instagram? Twitter? [Maybe if they follow President Trump.] The power of “Google My Business” for SEO to gain more borrowers? Sure, it’s likely us Boomers use Facebook to view the latest grand-kids photo. But use these platforms to scale their business, NOT A CHANCE.

  • The existence of an App the Lender can enable a consumer to download to their smartphone and tap a $500 line of credit?
  • An App that enables a Lender to install an App on their borrower’s phone rendering it inoperable if the smartphone owner fails to make their monthly payment? [The phone is referred to as “bricked.” It’s a BRICK. Worthless. The borrower cannot uninstall the App. The borrower can only make 911 emergency calls with their BRICK!  Either the borrower makes their $75 [or whatever $$ payment]  payment or loses ALL access to their contacts – THEIR PHONE NUMBER – their FB, Venmo, Zelle, Telegram, WeChat, WhatsApp, photos, camera, digital wallets, bank Apps. music Apps…

The average price of a smartphone in the USA is $600! Many are much more expensive: Statista

Top 10 millennial App downloads 2020:

  • Instagram
  • Facebook
  • Snapchat
  • YouTube
  • Twitter
  • Amazon
  • Reddit
  • Pinterest
  • WhatsApp
  • Spotify
  • Netflix

You want to get into the “business of lending to the masses? Run your business from anywhere in the world? Fund small-dollar loans to anyone in the world?

Look for opportunities. Again, many Boomers are tired, burned-out, or simply want to pass on their years of hard work to someone who recognizes what they’ve built, will carry on the business, AND pay the Boomer overtime for all their years of hard work. This strategy certainly makes more sense than simply closing the doors and walking away.

If I were attracted to this industry – ANY industry – I’d be looking for the following scenario:

  • A motivated seller [Ask me, your accountant, your lawyer, biz brokers, walk into businesses you want to buy… tell Everyone you’re looking for a business.]
  • A seller lacking an easy “out.” No family to take over. No buyers.
  • The regulators, the compliance bureaucrats, the Chinese virus, and the riots and the looters have burned them out; mentally.
  • A seller who has finally recognized 90% of businesses don’t sell. They just close.

Let’s say a Boomer’s company is making $100,000 in profits/year.

  • Don’t pay more than $200K for it.
  • Don’t just handover $200K to the Boomer.
  • Offer $10K and a payout of $220K over 3 years, or 4 years, 5 years…?
  • NEGOTIATE!
    • Say you both agree to a payout of $200K over 4 years for the business.
    • Out of the $100K/year in profits, you pay the Boomer $50K/year for 4 years.
    • Accomplishing this, you the young, savvy, tech-oriented entrepreneur that you are, add value to the biz. You scale it BIG.
    • You buy more of these little moneymakers.
    • The Boomer is thinking, “You’re going to pay me $10K for my lease and a few desks and old computers plus $50K/year for 4 years and I don’t have to simply walk away from my life’s work with ZERO $$?” DONE DEAL!
  • IT’S a  NEGOTIATION! Get creative!
    • Negotiate the down payment
    • Negotiate the number of years you have to pay the Boomer off.
    • Negotiate how much training the Boomer provides.
    • Negotiate any real estate involved.
    • Negotiate with all the current vendors the Boomer has accounts with.
  • Almost 11,000 Boomers are retiring EVERY DAY! What do you think the numbers will look be after the current MESS this planet is in? MORE!
  • Buy MORE! Add the Internet MOIP strategy. Scale this monster cash machine. Eventually, you can sell for 10X+ the “sellers discretionary income.” [I prefer this metric vs EBITDA.]

SUMMARY:

  • The MASSES always need access to cash over the long haul.
  • Get the word out. Find that perfect”TARGET” company to acquire and enable you to accomplish YOUR GOAL!
  • Get control.
  • Build a TEAM. Incentivize them to succeed. Clear, transparent rewards given often.
  • Hire quick. Fire fast.
  • Scale it. Add social media, integrate with 3rd party vendors, and reduce your costs. Evolve to the phone.  [NOTE: Need an App for your biz? Want more info about “bricking a phone” so you can use it to collateralized your customer’s smartphone? Email: Jer@TrihouseConsulting.com
  • Renegotiate ALL existing contracts and leases with vendors.
  • Review every line item on your P & L. Cut…
  • Implement MOIP.
  • Outsource those tasks others can perform faster, better, cheaper than you. Your time is VALUABLE! Ask me for the PASSWORD: Resources.
  • The economy is not yet fixed BUT it will be very soon!
  • Protests will not end but OPPORTUNITIES are here now.
  • Be ready to rock-n-roll. While your competition is crying and moaning, you are ready to POUNCE!

Exciting times and new opportunities ahead! Stay tuned!

30
Apr

Fintech Lenders “Don’t Need No Stinking Badges” Quo: Lender to the Masses

Posted by / Profits, Strategy

How to Loan Money to Strangers

Man, there are some serious new approaches to “The Business of Lending to the Masses” entering the marketplace.

I’ve previously broken down OneMain.com,  Dave.com, and Earnin.com… and more on our Blog. Today, I point you to Quo.

Now if you’re “old school,” like I was back in the day, this will likely piss you off!

After all, to build your consumer loan business it’s likely you approached the launch of your payday loan business, your installment loan business, your car title loan business, your pawnshop business… whatever you choose to call it, and plodded through your state licensing process.

You then selected a loan management software provider, integrated with ACH and debit card providers, struggled to get a bank account opened… and on and on.

Just to get a State license can kill 30 – 90 days+.  Oh, you’re a Lender so let’s not forget to get your Bond! And your lawyer, your consumer loan contracts…

Of course, by collaborating with a federally recognized Native American Indian tribe you could get set up within 30 days and loan in 37+ States.

Why do I suspect the following Forbes piece will upset you?

Because these new Fintech Lenders “don’t need no stinking badges” – I mean licenses. [Shout out to Clint Eastwood in “The Good, the Bad and the Ugly.” Great movie and soundtrack!]

According to the Forbes article:

“Quo relies on using AI to sort through a user’s financial transactions to understand their spending habits.

Once a user’s economic history is compiled and interpreted, the startup sends a debit card to the user for financial use.

The debit card allows access to two types of loans via a monthly subscription: $5.99/month for $400 at 5% APR or $9.99/month for $700 at 2% APR.

Those interest rates are dramatically lower compared to credit cards and payday loans.

The startup providing these loans via a small-monthly fee with borrower-friendly APRs reflects their mission of not wanting their users to be in debt.

Unlike the conventional credit business models, profit is not made by keeping users spending and perpetually in debt to pay interest, but by getting them out of debt to build savings.

These loans come with user-specified constraints, such as the money can only be used at merchants that are relevant to the purpose of the loan.

If someone is taking out the loan to make a car payment, then the user can only spend that money to pay off the vehicle for that month.

More importantly, if a user falls behind on their loan repayment, Quo is able to restructure the loan in real-time to adjust to a person’s immediate financial constraints.”

Read MORE here: Forbes

Shout out to the author of this piece on Forbes! Frederick Daso Contributor. “I write about college students and recent graduates founding startups.”

PS: Want to know how to jerry-rig and integrate all the “plug-n-play” platforms and services available today for launching a consumer lending company “on the cheap?”

Grab a copy of our “bible:” The Business of Lending to the Masses. Here’s the “Table of Contents.”

Or better, schedule a consultation with Me & my Team: Clarity.fm Scheduling.

Visit Jer’s LinkedIn Profile: LinkedIn

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

4-WAYS I CAN HELP YOU!

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28
Aug

2024-Navigating the Texas Credit Access Business CAB & CSO: A Comprehensive Guide for CABs, CSOs, 3rd-Party Lenders, Regulators & Consumers

Posted by / Texas, Texas CAB, Third Party Lender Texas
Texas CAB Loan Model

The personal lending landscape can be complex, filled with various regulations and guidelines that lenders must navigate.

Texas, known for its robust economic environment, is no exception.

One option available to lenders in Texas is to operate under the Credit Access Business (CAB) / Credit Services Organization (CSO) model with a 3rd-party lender.

This blog post aims to provide an overview of the CAB/CSO model, how it works, and the benefits it offers lenders and consumers in Texas.

Texas’s Credit Access Business (CAB, often referred to as a CSO) model, presents a highly attractive and lucrative venture for businesses seeking to enter or expand in the consumer lending industry.

With a streamlined pathway to regulatory compliance and a specialized role that mitigates various risks, the model offers strong foundational advantages.

The model is particularly lucrative due to the ability to charge high Annual Percentage Rates (APRs), often reaching the 400%+ range, significantly boosting profitability.

Additionally, the model provides CABs a competitive edge through niche specialization and agility in responding to market demands.

As intermediaries, CABs are uniquely positioned to offer services from customer acquisition to loan origination to servicing, creating an ecosystem that benefits the business and caters to diverse consumer needs.

In summary, the Texas CAB Model delivers a compelling business case featuring simplified regulatory processes, significant revenue generation through high APRs, and unique market advantages, setting up Credit Access Businesses for considerable business success.

What is the Texas Credit Access Business (CAB) Model?

The CAB Model is a framework for businesses to offer short-term, subprime personal loans.

In this model, a licensed Credit Access Business [CAB] is an intermediary between borrowers and a 3rd-Party Lender. 

The CAB takes care of loan originations, underwriting, customer service, and the collection of payments, but it does not directly fund the loan. Instead, a third-party lender funds the loan. The third-party Lender is not required to secure a license. 

Texas CAB: How Does It Work?

1. Customer Application: A borrower applies for a loan via the CAB’s website/storefront.

2. Third-Party Approval: The application is reviewed, and if approved, the loan is funded by the third-party Lender.

3. Loan Servicing: The CAB takes responsibility for the loan servicing, including communication, collection, and compliance.

4. Profit Sharing: The CAB and the third-party Lender share the profits based on an agreed-upon structure. [Discuss details with me.]

Licensing and Compliance

Before operating as a CAB, a business must obtain a license from the Office of Consumer Credit Commissioner (OCCC) in Texas. It’s essential to adhere to the guidelines and laws specified by the Texas State OCCC.

For 3rd-Party Lenders

Advantages for 3rd-Party Lenders in the Texas CAB Model: A Deeper Dive

The Texas Credit Access Business (CAB) model, which has seen increased adoption in the State of Texas, has a unique structure that involves a third-party lender providing the actual loan capital. This lending model has several advantages for the 3rd-party Lender, and it’s worth diving deeper into what makes this framework particularly enticing for lenders providing capital to a Texas CAB.

1. Superior Return on Investment [ROI]:

By operating under the Texas CAB model, 3rd-Party Lenders can achieve superior returns on their capital. 3rd-Party lender fees are collected by the CAB from consumers on behalf of the 3rd-Party Lender, thereby achieving 10% – 15%+ on their capital [Typically collateralized 1:1 by the Texas CAB! I have details.] 

2. Market Expansion: Geographic and Market Expansion

By collaborating with a CAB, a 3rd-party lender can quickly expand its market reach within Texas without establishing a physical presence in the state. This quick-to-market approach allows for agile responses to market trends and consumer needs, creating more opportunities for revenue generation.

3. Lower Operational Overhead

In the Texas CAB model, the Credit Access Business oversees the operational aspects such as customer acquisition, loan application processing, underwriting, disbursement, and collections.

This means that the 3rd-party Lender can invest less in these areas, thus saving on operational costs.

They also avoid the need to maintain a customer-facing operation in Texas, which can be significant in terms of financial outlay and operational complexity.

4. No Need for a Separate License

One of the most immediate benefits for the 3rd-Party Lender is the regulatory relief that comes with not requiring a separate loan license from the Texas Office of Consumer Credit Commissioner (OCCC).

This is a significant advantage because obtaining and maintaining a license can be time-consuming and costly and subject lenders to audits.

The CAB takes on the responsibility of licensing and compliance, allowing the 3rd-party Lender to focus more on their core business operations.

5. Competitive Diversification

Being a 3rd-party lender to a Texas CAB allows a lender to diversify its product offerings.

This can be particularly valuable for lenders specializing in other types of loans and looking to diversify their portfolios without incurring high setup costs and compliance burdens.

Takeaways for 3rd-Party Lenders: The Texas CAB model with 3rd-party lending offers several compelling advantages for lenders who provide capital to Credit Access Businesses.

From reduced regulatory burdens to lower operational costs, risk mitigation, and favorable profit-sharing structures, the model can be an excellent avenue for 3rd-party lenders seeking to enter or expand in the Texas personal loan market.

Amplifying the Upside: Benefits for Credit Access Businesses (CABs) in Texas

For CABs

Operating as a Credit Access Business (CAB) in Texas, in partnership with a third-party lender, has several unique advantages. The CAB model offers numerous benefits for CABs’s from a specialized role in the lending ecosystem to specific profit opportunities.

Let’s delve deeper into why becoming a CAB in Texas can be a lucrative and strategic business decision.

Streamlined Regulatory Compliance & Facilitated Licensing

CABs are required to obtain a license from the Texas Office of Consumer Credit Commissioner (OCCC).

Once they get this license, they can act as an intermediary between borrowers and third-party lenders.

The licensing process for CABs is generally more streamlined than the stringent criteria that traditional lenders often have to meet.

Regulatory Expertise

As a specialized business, CABs often build up a wealth of expertise in navigating local and state regulations.

This makes compliance less cumbersome and allows the company to focus on growth and profitability. 

Risk Mitigation

Diverse Portfolio

By collaborating with multiple third-party lenders, CABs can diversify their loan types, spreading their risk.

The impact of defaults on any single type of loan is thus reduced. 

[NOTE: CABs who fail to collaborate with multiple 3rd-Party lenders for redundancy place their businesses at risk! Think of this strategy as you should for banking and payment processing!!]

Revenue Generation

Robust Revenue Potential via High APRs

Contrary to the misconception that the CAB model operates on thin margins, CABs in Texas often charge Annual Percentage Rates (APRs), reaching as high as 400%+.

This provides a significant revenue stream for CABs and, thus, a robust financial incentive to originate more loans.

Scalability and Profit

With such high APRs, the CAB model becomes exponentially profitable as the volume of originated loans increases.

Unlike traditional low-margin models, the CAB system in Texas allows for a more lucrative scaling strategy, where every additional loan originated adds significantly to the bottom line.

Impact on Revenue

Given the high APRs, even a modest volume of loans can generate substantial revenue >profits.

This aspect makes the business model extremely attractive for those who wish to enter the lending space without the overhead and risks associated with more traditional lending models.

Multiple Revenue Streams

CABs have multiple ways of generating income, including fees for providing ancillary services to borrowers and profit-sharing arrangements with third-party lenders. This results in a more stable and diversified revenue base.

Competitive Edge

Niche Specialization

CABs specialize in certain types of loans (e.g., short-term payday loans, installment loans, collateralized car title loans…) that traditional lenders don’t offer.

This creates a niche market where CABs can become the go-to option for borrowers.

Agility and Adaptability

CABs are more agile compared to traditional financial institutions.

They can quickly adapt to market changes, implement new technologies, and tailor their services to meet consumer demands, giving them a competitive edge.

Enhanced Customer Relationships

One-Stop Service

As an intermediary, CABs offer a one-stop service for borrowers, handling everything from application to loan servicing and even debt collection. This convenience can attract more customers and improve customer retention.

Local Market Expertise

Operating within Texas yields Texas CABs a strong understanding of local market needs and consumer behaviors, allowing them to tailor their products and services more effectively.

Takeaway for CABs

The Texas Credit Access Business model offers an array of benefits that can make it an appealing venture for businesses interested in the lending space.

From a more straightforward path to regulatory compliance and risk mitigation to diverse avenues for revenue generation and a competitive edge, the model sets up CABs for significant business advantages.

The Profit-Sharing Dynamics Between 3rd-Party Lenders and CABs in Texas

Texas’s Credit Access Business (CAB) model offers a unique and lucrative profit-sharing arrangement that mutually benefits both the CAB and the 3rd-party Lender.

This framework allows 3rd-party lenders to leverage the expertise and customer base of CABs while CABs benefit from the capital these lenders provide.

Let’s delve into how the profit-sharing mechanism typically works, focusing mainly on the 9.99% A, additional fees like NSF (Non-Sufficient Funds), and late fees that 3rd-party lenders may earn.

Risk and Reward Allocation

APR Distribution

In a typical arrangement, the 3rd-party Lender earns a 9.99% APR on the funds loaned to the consumer.

This APR is distinct from the higher APRs associated with CABs and serves as a stable, relatively low-risk revenue stream for the Lender.

Additional Fee Participation

In addition to the 9.99% APR, 3rd-party lenders often also share in other fees, such as NSF and late fees.

These fees can significantly boost the Lender’s profitability, especially when considered across a high volume of loans.

Revenue Collection by CABs

Efficiency and Expertise

CABs are responsible for collecting both the principal and interest payment and any NSF/late fees on behalf of the 3rd-party Lender.

The CAB’s established customer service and debt collection infrastructure ensures that these payments are collected efficiently, minimizing defaults and maximizing profitability.

Dual Benefit

While CABs do the legwork of collecting the fees, they are also vested in ensuring the collection process is efficient.

An effective collection process improves the CAB’s bottom line and incentivizes the 3rd-party Lender to continue partnering with the CAB.

Mutual Advantages in Profit-Sharing

Stable Revenue for 3rd-Party Lenders

The 9.99% APR and the additional fees offer 3rd-party lenders a stable and predictable income, which can be especially appealing given that CABs shoulder much of the operational workload and customer interaction.

Increased Capital for CABs

For CABs, the benefit lies in having access to the capital provided by 3rd-party lenders. [Reach out to Jer@TheBusinessOflending.com for details.]

This allows CABs to originate more loans and thus generate more revenue through their high APRs and service fees.

Enhanced Business Relationships

This profit-sharing arrangement fosters a healthy, long-term business relationship between 3rd-party lenders and CABs. It creates a symbiotic relationship where both entities profit while distributing operational responsibilities and risks.

The profit-sharing arrangement in the Texas CAB model provides a win-win scenario for both the CAB and the 3rd-party Lender.

With a reasonable APR of 9.99% and a share in additional fees like NSF and late fees, 3rd-party lenders enjoy a lucrative, low-risk revenue stream. 

Meanwhile, CABs benefit from the operational efficiencies of this model and the ability to access more capital to originate loans.

Both parties, therefore, have strong incentives to maintain this collaborative and profitable relationship. [See me for details.]

For Consumers

Unpacking the Benefits for Consumers in the Texas CAB Model

The Credit Access Business (CAB) model in Texas provides many benefits for consumers.

Understanding these benefits can offer valuable insights into how this lending model positively impacts borrowers. Let’s dive deeper into each of these advantages:

Increased Access to Diverse Loan Products

Variety of Options

The CAB model often leads to a more diverse marketplace for loans.

Since the Credit Access Business acts as an intermediary and facilitator for multiple third-party lenders, borrowers get a more comprehensive array of loan products to choose from.

Whether you need a short-term loan to cover an emergency expense or a long-term loan for home improvement, the chances are high that you’ll find a loan product that meets your needs.

Catering to Different Credit Profiles

Because CABs may work with various third-party lenders, a broader spectrum of risk profiles can often be accommodated.

Borrowers with less-than-perfect credit histories will find loan products suited to their financial situations.

Streamlined Application Process

The CAB will offer a streamlined loan application process, where a single application can be used to apply for multiple loan products.

This saves time for consumers and increases the likelihood of finding a loan that best suits their financial needs.

Transparency and Consumer Protection

Regulatory Adherence

The CAB model operates under the purview of Texas state laws, which are crafted to protect consumers.

CABs must be licensed and regulated by the Office of Consumer Credit Commissioner (OCCC).

This ensures a certain level of compliance and standardization that safeguards consumers against fraudulent practices.

Clear Terms and Conditions

Another benefit of the CAB Model is its level of transparency to borrowers.

CABs must provide clear, concise, and transparent loan agreements [Try getting THAT from your local Stagecoach bank or credit union!], making it easier for borrowers to understand the terms and conditions, including interest rates, fees, and repayment options. 

Informed Decision-Making

With transparent terms and the safety of state regulations, consumers can make more informed decisions.

Knowing the details upfront allows borrowers to more accurately assess the cost and affordability of a loan, reducing the risk of taking on unmanageable debt.

Enhanced Customer Service

Specialized Expertise

Since CABs specialize in subprime loan acquisition, underwriting, and servicing, their expertise in these areas is often higher than that of traditional lenders and banks.

This can translate to a smoother, more efficient customer experience from application to loan closure.

Personalized Service

Many CABs offer personalized loan servicing that includes prompt and proactive customer support.

Whether through easily accessible customer service lines, chat support, or in-person consultations, the focus is often on ensuring the consumer feels supported throughout the loan lifecycle.

Educational Resources

To add value to their services, some CABs also offer educational resources and tools to help borrowers understand loan management, budgeting, and financial planning.

This fosters a better customer relationship and empowers borrowers to make sound financial decisions.

Conclusion for Borrowers

For borrowers in Texas, the CAB model with third-party lending brings forth increased accessibility to a variety of loan products, enhanced transparency, and superior customer service.

These advantages contribute to a more consumer-friendly loan marketplace, enabling borrowers to manage their financial needs better.

In Closing 

The Credit Access Business (CAB) model in Texas presents a compelling business opportunity in the lending arena for 3rd-Party lenders, consumers, regulators, and CABs. 

Its distinct combination of robust revenue potential attributed to high APRs to offset the risks of lending to subprime borrowers having nowhere else to turn when faced with a sudden financial emergency, a streamlined approach to regulatory compliance, and its benefits to consumers make it attractive. 

Add to this the inherent risk mitigation strategies and a keen understanding of local market dynamics, and it’s clear why the Texas CAB Model holds such allure.

For businesses aiming to capitalize on the lending space, the CAB model in Texas establishes a pathway to substantial profitability and superior ROI.

Want to be a cab?

A 3rd-Party Lender?

Do you know just enough to be dangerous?

Do you need an in-depth understanding of how the Texas CAB/CSO consumer loan model works?

Are you wondering how the 3rd Party Lender fits into all this?

Why it appears you must pay to lend your own money? How do you get licensed to offer loans in Texas? Do you need a 3rd Party Lender?

We’ve got you covered! We offer an 88-page “Texas CAB/CSO Small Dollar Loan Analysis”  that thoroughly explains how you can enter the lucrative Texas market for lending to the masses. 

The “3rd Party Lender rule can be difficult to grasp. Texas does NOT allow you to loan your own money. Weird, right?

Limited Time!

“Inflation Fighter Discount”

How to Start a Texas CAB - CSO

$50 Investment

Invest in a copy of our Texas CAB Analysis Manual.

How to start a payday loan business, an installment loan business, a car title loan business...
16
Jun

Supreme Court Rocks the Boat: Native American Tribe Lenders Subject to Bankruptcy Laws

Posted by / Laws, Tribe
Native American Indian Executive-Installment Lender

In the case of Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin, the Supreme Court ruled that Native American tribes are subject to bankruptcy laws like any other creditors.

Lac du Flambeau Band owns an online payday lending operation and argued that their sovereign immunity excluded them from an automatic stay of the Bankruptcy Code when a customer files for bankruptcy.

The Supreme Court, however, affirmed the lower courts’ decisions that such an exemption does not exist.

Justice Ketanji Brown Jackson, speaking for an 8-1 majority, asserted that a congressional statute only overrides sovereign immunity if Congress uses “unmistakably clear” language.

According to Jackson, the Bankruptcy Code satisfies this criterion as it unequivocally includes any and all government entities within its scope, including federally recognized tribes.

One point of contention was whether a federally recognized tribe qualifies as a “governmental unit.”

Jackson argued that the comprehensive nature of the definition of “governmental unit” within the Bankruptcy Code, which includes a broad range of governments of varying sizes and types and concludes with a catchall phrase that encompasses ‘other foreign or domestic governments,’ would naturally include such tribes.

An important part of Jackson’s argument was her interpretation of the phrase “foreign or domestic .”

She argued that pairing these two extremes indicates all-inclusiveness, providing examples like ‘rain or shine’ and ‘near and far.’

She contends that placing this pair at the end of an extensive list signals an intent to cover all forms of government.

Furthermore, Jackson reasoned that if enforcing regulatory authority during a bankruptcy or tax collection can be applied to governmental units, excluding certain governments from this definition would be inconsistent, particularly when these governments, like states and the federal government, also engage in tax and regulatory activities.

Given the governmental functions performed by federally recognized tribes, she concluded that the Bankruptcy Code also categorically applies to them.

Jackson dismissed arguments from the Band and dissenting Justice Gorsuch that the statute does not mention tribes explicitly, noting that the rule is not a “magic-words requirement” and doesn’t necessitate an explicit mention of Indian tribes.

She refuted Gorsuch’s claim of a rigid division between foreign and domestic governments, arguing that all governments fall somewhere on the spectrum between foreign and domestic.

The justices’ near-unanimity suggests a lack of willingness to twist the language of the Bankruptcy Code to exempt tribes from it, especially when such immunity is not granted to the states or the federal government.

Ready to learn more?

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20
Apr

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

Posted by / Collections
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!

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

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.

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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.

13
Dec

For Lenders: “What If” Scenarios Excel Powered

Posted by / Courses, Profits

TYPICAL WHAT-IF SCENARIOS

You buy leads. Should you buy $2.00 leads? $10 leads? $50 leads? $100 leads? $185 leads? [The average CAC [Customer Acquisition Cost in our industry is $185.00]

What’s the impact on your loan portfolio if you convert 8% of $50 leads vs 3% of $10 leads?

What if you increased your “reacts” to 65% vs. 42%?

What if you could hire an offshore VA [Virtual Assistant] at $200/month and work to increase your organic leads to 20/day vs. your anticipated 5/day?

What would be the impact on your portfolio if you purchased 150 leads daily at $8 with a conversion rate of 4% vs. 100 leads daily at $50 each with a conversion rate of 18%?

What is the impact on your portfolio if you increased your average loan principal to $425 vs. $385? To $500? $800? Whatever?

What is the impact on your portfolio if you decreased your FPDs [1st time Payment defaults} from 30% to 12%?

What’s the impact on your P & L if you increase your employee average hourly rate from $12.50/hr to $15.25/hr

What if you bring your call center in-house?

What if you add online/storefront title loans to your product offering? Say an average $1200 loan principal with a term of 6 months at $20/$100 loan principal? At $25/$100 loan principal for 30-day terms?

What if you offered a 36% APR unsecured loan product? An 80% APR? A 120% APR?

What if you implemented a formal referral program and spiffed your employees $25/funded loan? Spiffed customers $50/title loan?

What if your ACH fees increased from $1.50/each to $1.75/each?

What is the impact on your portfolio and P & L if your LMS [Loan Mngt. Software] provider increases its monthly fee from $150/month to $200/month & $1.00 per transaction?

What if your ACH fees increased from $1.50/each to $1.75/each?

What is the impact on your portfolio and P & L if your LMS [Loan Mngt. Software] provider increases its monthly fee from $150/month to $200/month & $1.00 per transaction?

And on and on and on… Only your imagination limits your possibilities!

The purpose of what-if scenarios is not to predict the future, but to influence it.

Plug-in different scenarios into our “Financial Modeling Projections Tool.” Develop a plan to improve those projections and execute them.

Your financial projection estimates your business’s future revenue and expenses based on various inputs. Our financial modeling tool enables you to “play” with these inputs.

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14
Apr

Look Out! Subprime Lenders Facing Turbulent Times

Posted by / Uncategorized

The Future of the Small-Dollar Micro-Lending Industry

We define small-dollar micro-lending products as relatively small loan principals of $50 to $5000 for seven days to 48 months having APRs of 30% to 1500% or more. These products include payday loans, car title loans, installment loans, line-of-credit loans, pawn, rent-to-own and similar products not yet envisioned.

Sub-prime, small-dollar micro-lending products are a normal market response to demand for short-term liquidity from borrowers with jobs but little access to other sources of funds. These financially challenged consumers lack access to credit cards, banks, and credit union funding. Their friends and family cannot help because it’s not only embarrassing to ask, but their peers are in similar circumstances.

Lenders must create a business model that:

  • Will survive and thrive under the current wave of competition.
  • Gain access to a sustainable cost of capital
  • Can compete with alternative loan products entering the subprime market weekly [buy-now-pay-later, early access to wages, Dave.com look-alikes, collateralized loan products…]
  • Can cope with new and existing regulations.
  • Can maintain bank relationships.
  • Can integrate with consumer credit-building opportunity platforms.
  • Anticipate consumer desires and their preferred debt vehicles
  • How and where consumers want to access loans
  • How to structure loan products

The business of lending to the masses.

Demand for subprime, micro-lending loan products continues unabated. As the middle class expands and high FICO (U.S.) consumers debase and decline into lower credit tranches, the demographic for subprime loan products will continue to scale! Study after study consistently concludes that consumers need access to quick, no-hassle, small-dollar loans to meet temporary financial emergencies.

Today’s inflationary environment drives demand for small-dollar loans as well.

Defaults: Price increases this year!

gas: +49%
used cars: +35%
hotel room: +29%
airline tickets: +24%
car rentals: +23%
bacon: +18%
oranges: +18%
furniture: +17%
peanut butter: +16%
crackers: +16%
steak: +16%
suits: +15%
butter: +14%
milk: +13%
lamps: +12%
coffee: +11%
cereal: +10%

My point? Defaults will soon prove to be an issue for lenders. Lenders need tools that provide instant, real-time financial data about their borrowers and applicants. Reach out immediately if you do not have access to the following instant alerts via your loan management platform:

  • Your customer gets paid
  • Your customer receives an IRS check
  • Your customer closes their bank account
  • Your customer’s bank account is negative
  • Your customer receives a loan from a competitor
  • Your customer’s job situation declines
  • Customer payment reminders
  • Ping nearly 50,000 financial institutions, including Cash App, money transfer apps, crypto apps…
  • And much, much more…

Why does this matter? Inflation is rising dramatically. Defaults will soar. Demand for loan products is scaling. He who can qualify, approve and fund a loan fast will win BIG in this new environment. The tool is here today. To learn more: TrihouseConsulting@gmail.com

The Internet and mobile technology continue to impact the small-dollar micro-lending industry profoundly. Consumers residing in states and provinces that do not allow payday loan products to exist routinely obtain them online. Imagine a web that isn’t focused around a computer but is everywhere, on every device, every person, accessible at every location. It’s not a place you go; it’s a layer behind everything you do.

The phone! Enough said! That’s where the action is. EVERYONE does business on their phone today!

Email is less and less likely to be opened by your customer on their desktop or laptop computers. Email “opens” in mobile devices now dominate. This is huge. Micro-lenders who are slow to adapt to this revolutionary reality will experience reductions in loan portfolio size and fail to achieve velocity.

Regulation will continue to dominate the small-dollar micro-lending landscape for the foreseeable future. In every country small-dollar micro-lending products enter the fray, they meet resistance from competitors, including banks and credit unions, so-called consumer protectionists, credit card companies, legislators, and competing Fintech platforms. Many licensing models, including choice-of-law, sovereign nation (tribe), offshore, state-by-state, and province-by-province, continue to “muddy the waters.”

On a local level, more than a few cities, townships, and counties are capping or restricting the number of payday loan financial service centers allowed. Brick-n-mortar operators must continually meet with and educate local politicians and city council members regarding their business and customers. Remind these politicians that our industry pays taxes, employs thousands of their constituents, contributes to the community, and pays leases and property taxes.

Regarding the CFPB (U.S),  we have personally met with the head of the CFPB and various Asst. Directors of the CFPB. Our takeaway is that they are focused on transparency and disclosure of all fees rather than some Machiavellian legislative initiative.

International entry into small-dollar micro-lending continues. Payday loans, installment loans, car title loans, line=of-credit loans, etc., are offered in the U.S., Canada, the U.K., Australia, Poland, Latvia, Mexico, Latin America, South Africa, and more. Interestingly, companies with international small-dollar micro-lending success are entering the U.S. despite the perceived regulatory climate.

Payment Processing may be the most dynamic area today for the small-dollar loan industry today. Crypto and the lightning network are already upending our sector. Signup for our free monthly Newsletter for breaking news about vendors offering state-of-the-art platforms that eliminate chargebacks, ACH fees, and deliver instant funding for pennies.

Bottom line: This is the time to be a lender to the masses. Opportunity is the word of the day. For those of us willing and able to envision what new loan products and delivery systems should look like, the “world is our oyster.”

How to Loan Money to the Masses

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

Course: How to Loan Money to the Masses

How to Loan Money to the Masses Profitably
How to Loan Money to the Masses Profitably

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!

The near-prime will soon be the subprime. Demand for loans of $500 to $5000+ continues to escalate. Opportunities are boundless for lenders.

As a lender, your inventory is MONEY! Not tulips dying. Not bananas rotting. The 99% will ALWAYS need money. Debt is the reality of living in America.

What do we do? We teach entrepreneurs how to lend money to the Masses. We lend money. We offer Courses, consulting, investments, access to our vast network of vendors, lawyers, Instant Bank Verification, payment processors, website designers, and underwriting...

We are 100% focused on the business of lending to the masses! Installment loans, car title loans, payday loans, line of credit loans...

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