Payday Loan Industry Statistics and Facts

Payday Loan Business Industry Profits and Statistics
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Payday Loan Industry Facts & Stats

Payday loan businesses, installment loan, car title loan and line-of-credit loan stores and Internet sites are popping up all over the United States, Canada, Mexico, the Caribbean, Australia, New Zealand, England, Ireland, and more. The payday loan industry - alternative financial service centers/small dollar lenders - focused on funding loans to both prime and sub-prime consumers may be the fastest growing financial segment - bar none! Not only can you find a consumer loan store almost everywhere but additionally there are consumer/payday loan web sites as well. As a matter of fact, the payday/consumer loan internet component offers even greater rewards than the consumer/payday loan brick-n-mortar!

So, why is this so? Why is the consumer loan industry growing at such a rapid rate? And why are a few of the most savvy financial minds entering this "loan shark" business segment? The answer of course, is the TREMENDOUS PROFITS AVAILABLE! Depending on the state or province, small dollar loan/payday loan consumers are paying $10 to $35 per $100 borrowed for a term averaging 8 days. These cash advance fees are equivalent to 480% to 1200% APR's (Annual Percentage Rate). These returns are simply PHENOMENAL! Only banks can achieve higher APR's via their NSF fees!

Not only are the fantastic profits luring entrepreneurs to the payday - consumer - loan industry but consumers throughout the world have an insatiable demand for the consumer loan product! Small loans ranging from a few hundred dollars to $1500 or more are in huge demand by cash strapped consumers everywhere on this planet. The demand for these so-called "micro-loans" is so profound that Muhammad Yunus who founded the Grameen Bank won the Nobel Peace Prize in 2006 for leveraging small loans to impoverished families. Take a look at his book; "Banker to the Poor: Micro-Lending & the Battle Against World Poverty". (Couldn't we use a portion of our profits and our business model to help families? Think about it!)

How to start payday loan business Sure, you're reading this and saying to yourself, "Who the heck needs to borrow $300 until their next paycheck? I cannot imagine." So, here are some quick payday loan demand statistics:

  • Payday loans, just in the USA, are estimated to be a $40 billion to $50 billion dollar industry and still growing 20% to 30% annually! (Internet transactions are difficult to estimate)
  • Avant and Elevate- installment lenders - funded nearly $350M in loans during the past quarter!
  • Publicly traded payday loan companies like: EZ Corp (Nasdaq: EZPW), Cash America (NYSE: CSH), QC Holdings (Nasdaq: QCCO), Advance America Cash Advance Centers (AEA), First Cash Financial Services (FCFS), and more are growing 20% to 40% in gross annual revenues and profits. Listen to their quarterly conference calls and check their 10K's.
  • Consumer loan lead generating companies sell 40,000 plus leads per month for an average $25 to $185 each to sub-prime consumerloan companies. Note: in a Cash America conference call CEO Daniel R. Feehan stated as much. Here is a publicly traded payday loan company - since gone private - with net income exceeding $32 million dollars buying thousands of payday loan applications every month.
  • At a payday loan Internet forum, we talked to a payday loan operator purchasing 50,000 payday loan leads every day at an average $9.00 each. He claims to be funding 40% of them! Typical payday loan operator BS? Who knows...
  • We know from operating our own consumer loan, car title loan and payday loan stores, attending OLA, FISCA & CFSA Conventions, analyzing the earnings reports for the publicly traded consumer loan companies, and having performed dozens of consulting assignments that even a payday loan single store operator can gross an "average" 30% monthly gross on their "street money." A few talented operators have even higher margins! $100,000 loaned out on "the street" (average loan $278.00 X 360 loans) could result in a $30,000 gross monthly profit! THIS IS WHY OUR INDUSTRY IS IN HYPER-GROWTH!
  • 12 to 14 million households were served last year.
  • 100+ million transactions occurred last year
  • At a CFSA Payday Loan Convention, Mike Flores, a very respected analyst with Bretton Woods at the time, projected there will be 50,000,000 consumers of payday loans in the USA alone. (Note: we are certain this figure is low.) He also estimated there are roughly 18,000 payday loan stores and this number will grow to 60,000 USA locations! We are not even close yet! [We think consumer smart phones will eventually dominate the "business of lending money to the masses."
  • It has been estimated that 70% of us live paycheck-to-paycheck. One small setback, we search out a pawnshop, a friend, a family member, or a payday loan store.
  • The FED's issued a report that 46% of households cannot get their hands on $400 cash in an emergency today!

Payday loans, installment loans,car title loans and other creative loan products were developed to help a person receive the money they need today without having to wait until their next paycheck.

We delay the deposit of their personal check until their next pay day, which is usually less than 2 weeks away.

With a payday loan for example, they get the cash they need before their next payday!!

PAYDAY LOANS, INSTALLMENT LOANS or PAYCHECK ADVANCES are one of the fastest growing businesses in the US, Canada, Australia, Costa Rica, South Africa, England, and others. It's the ideal complement to your present business or as a new establishment. If you have a 5 ft. by 5 ft. area available, you can turn it into additional income.

We are helping entrepreneurs open payday advance/installment loan offices everywhere! There is a tremendous opportunity for individuals to open a consumer loan business and get in on the ground floor of a profitable, money making business. You can even open a consumer Loan business in conjunction with your existing business. Pawn shops, check cashers, liquor stores, tax services, car and truck rental companies, furniture rental stores, bail bonds, etc., are opening consumer loan businesses.

A typical 8 day paycheck advance extended to your client will yield an annual percentage rate on your money of 805%! (Depends on the state/province you're licensed in.) Starting costs vary tremendously and are determined by your goals. A new store might require leases, first and last plus a deposit, signage, licenses, phones, etc. Adding a payday advance loan business opportunity to an existing business requires hardly more than working capital, business cards, flyers, advertising, forms, etc.

Consumer Loan working capital requirements are determined by you! We're aware of new deferred deposit operators who began with less than $2500. (Typically, these are complementary businesses adding the consumer/payday loan product to their existing services.)

A paycheck loan and consumer loan business is easy to operate IF YOU KNOW HOW TO CONTROL IT. Typically, you advance your check to your client and accept their personal check for an amount in excess of the amount of your check. Your accepting a check, giving the writer less than its face amount, and holding it for an agreed upon period of time. Thus, paycheck advance or paycheck loan or deferred deposit or...

The rationale behind the boom in consumer lending and payday loans is perceived high credit card rates and high bank fees for bounced checks. Immediate gratification by the consumer is another driving force in the deferred deposit business. There is nowhere a consumer can go for a small loan in an emergency.

Banks don't do it and loan companies are too slow and complicated. High check bouncing fees drive the business. Banks charge a $35.00 fee and more for bouncing a check (even more for a 2nd or 3rd!). Then the original recipient of the check charges a fee. (Remember the recipient's bank charges a fee to them!) That can make a paycheck advance/deferred deposit fee the best choice.

To achieve success and make SERIOUS MONEY you need Information. Our "Payday Loan Bible" covers the following topics:

Comprehensive training for consumer lending, payday loan and car title loan store models and the Internet model

  • Table of Contents
  • Covers both store and Internet payday loan businesses
  • 500+ pages
  • Installment loans
  • Payday loans
  • Car title loans
  • Line-of-credit loans
  • To Be Successful, Do This
  • Our Goal
  • Macro-Overview of PDL's & Micro-Lending
  • Hang-in There Lenders, The Future is Ours
  • Flash it's a Whole New Business - Quick hits and last Minute Observations
  • 1st Look at the Internet Model
  • Consumer Loan Business Analysis
  • Payday Advance and Consumer Lending General Overview
  • General Tactics
  • Exhibits A - F
  • Master Agreement
  • Extension Procedures
  • 3rd Party Collection Issues
  • Manloading & Personnel
  • How Much $$ Can You Earn
  • Sub-Prime Consumer Reporting
  • Software (LMS)
  • Electronic Funds Transfer
  • Demand for Internet PDL's and other Consumer loans
  • Marketing Other Than Search Engines
  • Purchasing Loan Leads & Applications
  • Email Strategies
  • Mobile Friendly Web Sites
  • Faxing of Documents
  • Collections
  • Determining APR Formula
  • Default Rates
  • Compliance Issues
  • Licensing & Regulations
  • Choice-of-Law Model
  • State-by-State Model
  • Sovereign/Tribe Model
  • Offshore Model
  • CSO>CAB Model
  • Bank Model
  • Creative Models
  • Demographics
  • Marketing, Branding and Advertising
  • Tactics & Strategies
  • Site Selection
  • Consumer Loans & the Internet
  • Internet Demographics
  • Call Centers
  • Prepaid, Stored Value & reloadable Cards
  • Kiosks or Automated Financial Centers
  • Additional Income Streams & Traffic Builders
  • Obtaining Funds for Your Consumer Loan Business
  • Bonds
  • Western Union Services
  • List of State Regulatory Agencies
  • Definitions
  • Guide to Buying a Franchise
  • Legal Resources - Lawyers
  • Business Plan
  • Final Thoughts on the Industry
  • Consumer and Payday Loan Contracts & Disclosure Forms
  • Discussion of alternative methods for conducting Consumer loans and Payday advances. (Internet Service Provider/cash rebate, Sale-Leaseback, Catalog sales, etc.
  • Includes our Canadian Consumer Loan Resources when we ship to Canada
  • Includes our Consumer Loan Software Report
  • Includes Australian Consumer Loan Report when we ship to Australia
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How to Start Payday Loan Business

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