Consumers Feel The Pain: Nationwide 36% APR Cap Theme Continues: Illinois and Nebraska Go Dark.
By: Jer Ayles
Fellow small-dollar lenders, vendors, and MOST importantly the 50%+ of U.S. households who do not have access to $500 when the car breaks down, the utility bill is due, the kitchen is bare, the… well, you know what I’m saying! The politics surrounding “the business of lending to the masses” continues to create havoc for the unbanked and underbanked.
[Hint: There is good news below. It “ain’t ALL bad.” Our industry is blessed to have a cadre of savvy, creative entrepreneurs who continually strive to serve the millions of ordinary folks facing daily financial struggles.]
As you read the following, know that simply because our competitors [banks & credit unions who earn billions of dollars in overdraft/NSF fees every year while yielding 1800% APR’s] continue to make it challenging for the masses to access emergency cash, I HAVE SOLUTIONS!
If you’re a seasoned Lender with a portfolio of customers you want to continue to serve and help through these trying times, consider:
- Go digital. You must be able to carry on via the Internet. Most likely your current loan management software already provides a sleek, easy transition.
- Secure a lending license in a friendly State. A State that truly cares about its people. I like Texas right now. Our Team has been securing Texas CAB/CSO licenses for 12+ years. We offer a turn-key package. We have “feet on the ground” in Austin. Allow us to handle the intricacies & “go live” in 30 days. City ordinance issues in your State? Not a problem! We have a simple, EZ solution for you.
- Collaborate with a federally recognized Native American Indian tribe. The “Tribal Model” has come a LONG way since the Scott Tucker days.
- We’ve assembled a highly experienced Team of financial, legal, tax, asset protection, and business development savants offering introductions to Indian Country. State-of-the-art consumer finance loan products, in combination with integrity, honesty, and community service is our mantra. This is not your Mama’s old school payday loan; although many of our clients do still offer them by the millions annually.
NOTE: For those of you currently partnering with Indian Country and are unhappy with your current relationship, don’t hesitate to reach out! You’ll be pleasantly surprised how easy we can make your transition and more profitable for all parties. Use your existing LMS provider, your proprietary solution, or opt-in to ours. Your choice!
Know too that if you’re in need of:
- A turn-key, white-labeled Loan App [both IOS & Android: No developers needed!]
- Superior Instant Wage Verification [IWV] Real-time wages earned data pipe from 70K+ employers including Amazon, CVS, Walmart, UPS, Target, Best Buy… Visit Website
- Instant Bank Verification [IBV] 100% guarantee we’ll save you money no matter who you currently use for IBV!
- AI-powered consumer debt negotiation platforms. Our white-labeled platform enables your “Robot” to negotiate 24/7/365 with ZERO HUMAN intervention by your team. Your customer in default does not ever have to speak to a human. Negotiate, make a deal, collect your money! Visit Website
- All the above white-labeled for YOUR brand!
- If you’re an investor on the hunt for a superior return on your capital, reach out. The taxpayer-funded stipends will end. Demand for credit will scale. Negative interest rate bonds and CD’s do not make any sense for those of us having capital that must work for us. Inflation is a CERTAINTY!
- We have the relationships with the Founders of each enabling you to bypass any middlemen!
Reach out to Jer@TrihouseConsulting.com for a confidential exploration. [Be sure to include the topic you are interested in!]
And, if my message here was forwarded to you, signup for my free, monthly take on “The Business of Lending to the Masses” here: Blog [Signup is on the right-side]
Now! Regarding the latest 36% APR developments in Illinois & Nebraska:
ILLINOIS NEWS RELEASE: HISTORIC LEGISLATION TO PREVENT PREDATORY LOANS PASSES ILLINOIS HOUSE
The Predatory Loan Prevention Act establishes a 36 percent interest rate cap on consumer loans.
For Immediate Release
TUESDAY, JANUARY 12, 2021
The Illinois House of Representatives passed the Predatory Loan Prevention Act today, implements a 36 percent interest rate cap on consumer loans, including payday and car title loans. The legislation passed with a bipartisan vote, without a single member voting no. It is part of an omnibus economic equity bill, one of the Illinois Legislative Black Caucus’ four pillars, sponsored by Rep. Sonya Harper.
In Illinois, the average annual percentage rate (APR) on a payday loan is 297 percent, and the average APR on an auto title loan is 179 percent. Federal law already protects active-duty military with a 36 percent APR cap. This bill extends the same protection to Illinois veterans and all other consumers. Seventeen states plus the District of Columbia have 36 percent caps or lower.
Waiting for Governor to sign this Bill.
NEBRASKA NEWS RELEASE
What did Initiative 428 change about payday lending practices in Nebraska?
Initiative 428 amended state statute by removing the existing limit that prohibits payday lenders from charging fees in excess of $15 per $100 loaned and replacing it with a 36% annual limit on payday lending transactions. It also prohibited payday lenders from collecting fees, interest, or the principal of the transaction if the rate charged is greater than 36%. Payday lenders are prohibited from marketing, offering, or guaranteeing loans with interest rates exceeding 36% in the state regardless of the lender having a physical office in the state.
Here’s the link: Nebraska Initiative
At the time of the election, Nebraska law limited the loan amount to $500 and the loan term to 34 days.
Payday lending has been legal in Nebraska since 1994 with the passage of the Delayed Deposit Services Licensing Act. The last amendment to the statute was in 2018 by the state legislature. Under the existing law, lenders are prohibited from charging fees in excess of $15 per $100 loan. Loans are also limited to $500. According to the 2019 annual report on delayed deposit services produced by the Nebraska Department of Banking & Finance, the average loan size was $362, and the average contracted annual percentage rate was 405%. The total number of transactions for the year was 507,040.
How many other states have limited the annual percentage rate (APR) of interest charged on payday loans?
As of October 2020, a total of 37 states permit payday lending. Four states—Colorado, Montana, New Hampshire, and South Dakota—have enacted 36 percent annual interest rate caps that prohibit additional fees or charges. Three of those caps were passed through citizen initiatives: Colorado (2018), South Dakota (2016), and Montana (2010). Four states authorize payday lending with limits on APR, but permit lenders to charge extra fees on top of interest. The remaining 29 states authorize payday lending without limits on APR.
Here’s a link to the current Rate Caps by State: Payday Loan Statewide Rate Caps
FINALLY, this 36% APR theme is going to be a dominant issue during the Biden Administration. PREPARE for it!
That’s all, dear readers!
Jer: Trihouse Consulting 702-208-6736 PDT