Payday loan lenders in competition with Banks in the business?

1 Mar 2013 | No Comments | posted by cash-fast.net | in Articles

The Federal Deposit Insurance Corporation (FDIC) has introduced a program in which banks can actually offer loans that are small enough so that they are attractive to buyers, just like the payday loans. But the competition is stiff, and this program is not doing well apparently.

The FDIC came to know that there were only 31% of the banks that actually participated, and during the 4 years of the implementation, there were only 5.5 million bucks that were generated by 8300 dollars loans by the banks themselves. On contrast, the payday loans are much bigger, going over 150 million loans that sum up to billions of dollars.

The FDIC did an interesting survey and study, and found out the real reason why the lowered rates from the banks were not working out. The simple fact was that the customer was still paying the same to the bank as before, due to the fact that the bank payment terms were significantly longer than those of the payday loan lenders. Even if the participating banks made two or three times the loans as the payday lenders, the business was not that great as compared to the payday money lenders due to the above reason. On an average the small dollar loan at a bank is $675 and the average rate of interest is about 15%. Loan terms from banks are about 10 to 12 months.

The payday money lenders on the other hand, and depending upon the state that you are in, will have a capped amount on the money being lent and the amount is usually in the range of $200-1000 in most cases. On a yearly average, the interest rates for the money lenders is as much as 500%, but because of the fact that the loan terms last only for few weeks, the user is still on the profit side because he does not pay the same interest as he would in the case of a bank. There can only be a problem if the borrower makes a choice to get a rollover, meaning that he chooses to extend the loan, in which case he will have to pay more.

Good deals on small dollar loans, is not what the traditional banks are gunning after. But they do look for prospects of building a good relationship with customers with the same. Through this program, the banks see greater and better opportunities of getting more and more customers to sign up.
Perhaps the greatest asset for payday loan lenders is the fact that customers have a lot of convenience. The process is actually a very simple affair of just filling an online form, filling in all the details, giving out the statements for the bank, the salary details and the like, and it’s even possible that the loan gets sanctioned on the very day. This sort of convenience is the winning formula behind the success of the payday loan lenders, and is one of the major reasons why the banking sector is not able to keep up. So we can say that the key factor here is convenience.

In a general scenario, the money lender will work out a schedule for payment based on the schedule of the borrower, and once that has been done, he expects that the borrower to return the money on the next paycheck. In cases of failure, the loan amount can be increased and this means that the borrower gets more time to repay the debt. The biggest plus point is that there is no check record because checks do not form part of the business, and that’s what makes this exercise much better than the traditional method of applying for loans at a bank.

Are you getting partially informed by the payment debt collector?

22 Feb 2013 | No Comments | posted by cash-fast.net | in Articles

The US has become a hot spot for payment and lending of debts and there are as many as 30 million active Americans who are involved in the debt process in one way or another, making an average of 1500 dollars. Phone calls, emails, letters and searches on the Internet go on night and day to find the borrowers and the lenders alike, and the trend is only going to increase.

When someone into debt becomes a defaulter, then the collectors leave no stone unturned in making sure that they find that person. The process begins with small steps, and subsequently goes on to larger ones. So in effect, letters are sent first. Later on phone calls are made. When phone calls are not answered the next targets are the references listed on the account and profile. After the references the employers are contacted and they are queried about the history of the employee. Finally, Facebook and Twitter are the destinations that they look into to find the defaulter. In essence, they utilize every rule in the book and then some, to find out where the defaulter is. This process is just not unique to the payday collectors, but is universal. It’s actually how they make all that money.

So how exactly do these collectors go about their job of getting the defaulters to pay up? Obviously there are a lot of things that just meets the eye and that’s what we will be exploring next.

1. The economy of the country is kept alive by them. There is about $8 million that comes in annually through 10000 cash collectors who ensure that the economy is kept alive for the country.

2. The simple fact here is that the more you have to pay, the more they earn from you. There are bonuses involved when you pay up and how you pay up. The top dogs have the ability to make over 10K a month. There are some who are pushy in their approach and there are others who are nice to you. It doesn’t matter actually.

3. Of course, they have vast powers. 15%-33% of the total debt is often relegated as resettlement approved to the collections of the total debt. This essentially means that you can get settled on a lower amount by the collector. The same applies for credit cards & other debts.

4. Low ball offers is what they take. For example if you are making an offer pennies versus dollars then the collectors will be happy to take up the offer. You can usually make a start with a 25 cent offer for every dollar that you owe, and they will have it.

5. They usually follow the policy of the good cop and the bad cop. This simply means that they will not make it easy for you if you are thinking of desisting. They will tell you over the phone that it’s the manager who’s doing it but in effect, they will be doing it themselves.

6. Limitations on debts have statutes- Statutes also exist on the limitations of the debts and there are also limitations on the collectors who are filing lawsuits to the concerned bureaus, and this varies from state t state, and you will be notified if you have eclipsed the date. The lawsuit is opened up again if you don’t happen to acknowledge or recognize the debt you are in, and it does not matter how big or small that debt really is.

7. By default, they will find it the most enjoyable to call you up when you are working. This will be especially bad if you are thinking that you will not be able to pay back. The stress is multiplied because it’s the work that you are in and such calls should not be made at that time. They are legally bound to stop this pestering if you tell them to.

8. Of course, there are other laws too that bind the collectors from harassing you. Before 8 am and after 9 pm they are expressly prohibited to call you up. Other cases of prohibition include the threats to arrest you and other similar threats. You have the right to go to the Federal Trade Commission or even to the Attorney general if they make advances on you.

Will I be bothered by a payday loan lender if I am the reference?

15 Feb 2013 | No Comments | posted by cash-fast.net | in Articles

Loan lenders of the payday variety will often ask the borrower for a reference or two in order to authenticate the borrower’s credentials. This is a normal procedure and is used to protect the interests of the money lender.

In fact the references are not asked so as to ensure that the candidate is right for the loan. This does not work in the way that an employer calls up the candidate’s the family and friends to ask whether he is right or not. Contrary to this, references are there to provide whereabouts or information regarding the candidate if he defaults his loan payments. In that case, what happens if you turn out to be that reference and your phone starts ringing and you aren’t responsible for somebody’s debt?

Bound by Fair Debt Collections Process Act, you can be rest assured that even as a reference you will not be harassed by the collector himself. You are a reference and you will be needed only when the candidate has moved to a different address and the collector does not know it, or if the employment of the candidate has changed. Collectors will by no means be eligible to reveal the fact that the candidate has eclipsed the date of the payment, and for that matter, you are just an informant. Nothing more or less.

So what choices do you have to stop receiving phone calls about the loan and the candidate and what needs to be done so that they don’t bother you. You have some options to get rid of the phone calls and that comes when you aren’t a co-signer yourself.

You are in no way responsible for another person’s debt, and this means that the collectors will in no way try to extort the debt money from you. You have the power of the law if the phone calls become something of a hassle and you can tell them to stop calling you. You can take their agency name and address and can threaten them with a warning that you will be contacting the attorney General if the harassment does not stop. That’s your power.

The retailers need to be explicitly notified that you are not responsible for another person’s debt and this means that they will in no way try to harass you in regards to the debt.  You can tell the individual who listed you in the debt to expressly remove the name if the harassment continues.

If payday loan officials keep contacting you about the debtor and the loan, you have a legal right to tell them to stop that process and get your name removed from the account. You are just listed there as a reference and your job is to provide information to the best of your knowledge, not give out money on behalf of the debtor himself. Of course, loans like these are great in times of emergencies, but they can be an inconvenience to others in the process itself.