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?

11
Jan

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

Posted by Team Jer / APR's

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

10
Jan

A Story About Jake, the Debt Collector

Posted by Team Jer / Uncategorized

Here’s a story about a debt collector named Jake:

Once upon a time, there was a debt collector named Jake. He had been working in the collections industry for many years. He had seen it all – from borrowers who genuinely wanted to pay their debts but were facing financial hardships to those who simply didn’t care and thought they could get away with not paying.

One day, Jake received a file for a borrower named Maria. She had taken out an installment loan to fix her car. Shortly afterward, Walmart cut back her hours, so she could not make her payments.

Jake had heard this story many times before and was prepared for the usual excuses and pleas for leniency. But when he called Maria to discuss her account, something unexpected happened.

Maria answered the phone, and Jake could hear the sound of a baby crying in the background. He asked if everything was okay, and Maria burst into tears. She explained that her husband had recently been laid off from his job, and they were struggling to make ends meet. They were about to lose their home and had no idea how they would feed their family.

Jake, the debt collector, was moved by Maria’s story and knew he had to do something to help. He took the time to listen to her and understand her situation. He then suggested that they work out a payment plan that would be manageable for her and even offered to call other creditors on her behalf to see if they could work out a plan.

Maria was extremely grateful and thanked Jake for his kindness. She could make her payments on time, and eventually, her husband found a new job. With Jake’s help, Maria could get back on her feet and start rebuilding her credit.

[Jake’s employer, a personal loan company, signed up with a new platform that reports their subprime consumer loan customers’ payments to 2 of the 3 major credit bureaus! Their verified loan payment information is submitted directly to Transunion and Equifax! PS: This helps Maria and her husband build their credit AND provides leverage for subprime Lenders!] Thus, thanks to Jake, the debt collector’s efforts, Maria and her husband are rebuilding their credit.

Jake’s colleagues were impressed with his ability to connect with the borrower and find a solution that worked for both parties. They could see that by treating borrowers with empathy and understanding, they were more likely to work with them and find a way to resolve their debts. From that day on, Jake’s peers followed in his footsteps, tried to connect with the borrowers, and helped them in any way they could for the betterment of their employer and the debtor.

The moral of the story? A good debt collector always tries to understand the borrower’s situation and find a solution that works for everyone. A little empathy goes a long way!

PPS: Are you a Lender to the subprime? Would you like an introduction to this new credit-building platform? Email me at TrihouseConsulting@gmail.com. Your subject? “Credit Builder.”

Team Jer

20+ years in "the business of lending to the masses." Operator, lender, consultant... a virtual CONDUIT for the industry. Need help getting into the industry? Have questions? Looking for 3rd party vendors and suppliers? Reach out... Jer

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.”

13
Dec

For Lenders: “What If” Scenarios Excel Powered

Posted by Team Jer / 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.

Invest Now! Only $50.00. Delivered to your Inbox. Visa, M/C, PayPal…

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.

19
Nov

Trends: Lending to the Masses Opportunity

Posted by Team Jer / Uncategorized

Trend:

Consolidation/Acquisition/Rollup Efficiency Opportunities

Lenders must grow their loan portfolio

Inflation is reducing discretionary income for our demographic

Loan DEMAND is up and will scale into 2023+

Loan ORIGINATION volumes are suffering.

Loan APPROVAL rates are decreasing.

Loan applicant “QUALITY” is deteriorating.

Near prime devolving to subprime and “reacts” are the primary source for loan originations

2023 Q1 tax refunds will reduce demand for subprime loans

One positive: Student loan forgiveness is a certainty. This will improve loan originations in late 2023+

Another positive: Employee pay increases likely will continue = increased applicant quality

Small operators are struggling with cash flow & cost of capital issues

Online First time payment defaults are 2.5X storefront. [we’re a relationship business.]

TAKEAWAY?

A unique window for Consolidation/Acquisition/Efficiency Opportunities and “rollup” opportunities exists today.

Efficient lenders should aggressively acquire competitors

Consolidate back office operations [CAC, Marketing, LMS, Underwriting, Servicing, Collections…]

IF YOU HAVE THE DESIRE TO ACQUIRE OR DISPOSE OF YOUR B2C LOAN BUSINESS, CONTACT JER AYLES: TRIHOUSECONSULTING@GMAIL.COM

IF YOU HAVE PORTFOLIOS TO SELL, CONTACT JER AYLES.

25
Oct

Lenders: 20 Very Cool Loan Ads to Riff Off

Posted by Team Jer / Uncategorized

You’ve got to check out these new commercials by Chuck Brennan’s Dollar Loan Center!

Chuck Brennan is a GOAT* in our “Business of Lending to the Masses!”

From humble beginnings, Chuck launched his first 100+ consumer loan locations in 1998.

Chuck has provided leadership & phenomenal inspiration to lenders, marketers, kids rock-n-roll…

He even built a fabulous Arena on the outskirts of Las Vegas dubbed “The Dollar Loan Center!” [Click on 2nd Image below]

Chuck’s a special guy! A FORCE in our industry.

Now, with Chuck’s blessings, I give you access to his latest Dollar Loan Center Commercials.

I HIGHLY recommend you share these 20 short clips with your marketing department. Get them in a room for “idea sex.” For example, if you’re in the SouthEast, a NASCAR theme could work. Texas? FOOTBALL!

Watch “Loan Approval Machine” on YouTube [Access to all 20 commercials.]

THE BLOG

Posted by Team Jer / Opportunities

For Entrepreneurs:

Posted by Team Jer / APR's

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

Posted by Team Jer / Uncategorized

Here’s a story about a debt collector named Jake:

PPS: Are you a Lender to the subprime? Would you like an introduction to this new credit-building platform? Email me at TrihouseConsulting@gmail.com. Your subject? “Credit Builder.”

Team Jer

Posted by Team Jer / Strategy

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

Our Philosophy

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.

Posted by Team Jer / Courses, Profits

TYPICAL WHAT-IF SCENARIOS

Invest Now! Only $50.00. Delivered to your Inbox. Visa, M/C, PayPal…

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

Posted by Team Jer / Uncategorized

Trend:

Consolidation/Acquisition/Rollup Efficiency Opportunities

TAKEAWAY?

Posted by Team Jer / Uncategorized

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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