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Questions about Starting a Payday Loan Business

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walkernine
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Questions about Starting a Payday Loan Business  Reply with quote  

Well I was thinking about renting a small office and lending small payday loan in CA, but was wondering what the laws are about it. Everytime I search something online it brings me to "payday loan cds and tapes" for sale, I figure this is a perfect place to ask.

Do you need a state, city or country license, registration ect to start? If so where do I turn it in?

Is there a minimum amount of money to start by law?

After the money has been borrowed and its ready to be payed back with the fee how do I automatically collect money from the borrowers paycheck? Is there a certain program I need? Is this done threw a bank?

If any links,, info or steps how to do this please post. Thank you.
Post Wed Jun 17, 2015 12:35 pm
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oldguy
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quote:
After the money has been borrowed and its ready to be payed back with the fee how do I automatically collect money from the borrowers paycheck? Is there a certain program I need? Is this done threw a bank?


You need to get a good understanding of your customers - many (most?) of them don't use banks. And you definitely won't be 'automatically' collecting - collecting is a big part of the job.

Yes, you need state and city licenses. And there are regs that limit your imputed APR. Plus the authorities oversee you closely - PayDay lenders are often a target of State Attys General who are being pushed by protestors that 'protect the poor' from high interest loans - so the flurry of new regs/laws is continuous.
Post Wed Jun 17, 2015 3:25 pm
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Wino
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The way I understand it, you have the person write a check today for the payback amount, but post-dated to whenever. Then, they can come in, give you another fee to not cash the check, or you cash the check.

Let's say you cash a check, and it bounces for insufficient funds. Now, normally, you could take the check to the police, and they'd go after the person for writing a known bad check...

Except, you KNEW it was bad when it was written. Therefore, you didn't receive a bad check unknowingly. Can you really get them for fraud?

I'd love to see that debated in court.
Post Wed Jun 17, 2015 4:57 pm
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walkernine
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oldguy- yeah i have seen many articles on lenders raising high APR between US and Europe and how there making new laws about it. I actually want to have a lower one to compete against the competition.

wino- great stuff. I knew it was done some way like that, but I know different places have different ways. Thanks guys.

Does anybody have additional info or some links where I can file the paper work?
Post Thu Jun 18, 2015 9:46 am
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DaleDegagne
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Totally not what you want to hear I'm sure, but for payday loan companies to cover their risk and make a profit, they need to be nearly predatory in nature with their fees. Their services only serve to keep their destitute clients in destitution.

Personally, I rank owners of them somewhere between criminals and cockroaches.

I'm sure you're a reputable guy though so if you want to get into micro lending why not check out peer to peer lending online? Here's one site for it: https://www.lendingclub.com/ Lower overhead, and higher quality clients.
Post Mon Jun 22, 2015 8:02 am
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christcorp
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Yea, payday loan companies are about the closest thing to pure scum there is. Charging upward of 240% interest on their loans. That's what happens when you borrow $100 and have to pay back $120. These are worse than "Loan Sharks".

The best part...... The 2 largest backers of payday loan companies, are "Wells Fargo" and "Bank of America".. Of course all of these banks, including JP Morgan Chase, Capital One, etc. all say they are cutting all ties to these loan sharks. The truth is, they won't. Just like "IRAN CONTRA", they'll find a way to invest in them under the table. There's too much money to be made.

Don't get me wrong. It's not always the lender's fault. It's mostly the borrower. Too many people trying to live beyond their means. Buying on credit. Rent to own. etc. If most of these people didn't try and live beyond what they made, they wouldn't need these types of loans. I worked for many years in a business where I saw up close and personal every economic walk of life in communities.There's absolutely no reason in the world for a person with low paying jobs, living paycheck to paycheck, to have a $500 a month car payment, 3 TV's in their house, $150 a month cable and internet bills, and $100+ cell phone bills. I don't have a lot of sympathy for a lot of the poor. They've made it where they can't get out and it's many times their own fault. When I first started out, I bought a used car, used furniture, wife and I car pooled to work, we saved our money to buy things, and built up a savings.

This doesn't excuse the loan sharks "AKA Payday Loan" companies. They can rationalize their 240% interest rates all they want. They are feeding off the idiots out there that need to learn to live within their means. But then, there's no money in that. So the leaches in the payday loan business exist. Backed by the mego-banks. Talk about money laundering. The banks could never get away with loaning at 20, 40, 50, 100% interest. But they can make weekly and monthly loans called payday loans at 200-300% interest, and it's perfectly legal.
Post Tue Jun 23, 2015 12:51 am
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DaleDegagne
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quote:
Originally posted by christcorp
They are feeding off the idiots out there that need to learn to live within their means. But then, there's no money in that.


God don't I know that. I started my company to help people with their money management/financial situations - teach a man to fish sort of thing. I always beleived that money coaching, which targeted $100K+ incomes was always too inaccessible for those that needed it.

What I found was that there simply is very little to be done to help the person who makes $25K, and scrambles to find $50. Even if you could provide something for $50 that would give them all the tools to help themselves, I would still guess the success rate would be quite low.

There's just some people who can't be helped in this world.
Post Tue Jun 23, 2015 1:34 am
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oldguy
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quote:
Yea, payday loan companies are about the closest thing to pure scum there is. Charging upward of 240% interest on their loans. That's what happens when you borrow $100 and have to pay back $120. These are worse than "Loan Sharks".



You may be exaggerating to make a point - but you're falling for the same hype that the political hacks fall for with their "help the poor, save the little guy' tripe.

The 240% is technically correct but it doesn't really apply to PayDay users. Consider the customer. He is out of money, has been getting Utility turn-off mail for months - and it finally happens. He sits in the dark, house gets colder, kids/baby crying, food in refrig starts to go bad. On Monday AM, goes to Utility, he has to pay all arrears, put up a new security deposit to get the power turned back on.
With PayDay loan, he can get a $250 loan on Friday nite, go to Utility & clean up the arrears before turn-off. No cold house over the w/e, no spoiled food, no crying kids. And he has 3 weeks to come up with $300 for PayDay, ie a $50 fee for the $250 loan. True - it may be 240%APR but that's not the point, the $50 fee is way better than a new security fee, a turn-on fee, spoiled food, yada.
Post Tue Jun 23, 2015 2:55 am
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christcorp
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Agree. Maybe a little exaggeration. But I also have too much first hand knowledge of the minimum wage or even the welfare recipient, living in cheap mobile home park, complaining about living payday to payday. At first, there's sympathy. Then, I see the new $30-$40K car that they are making $500 a month payments on. The 60" big screen tv in their living room. And many of these people are the same ones I see in the payday loan outlets and the pawn shops.

Not saying that everyone who is on welfare or uses payday loan type facilities are irresponsible. But there is a very large percentage. I've assisted quite a few people/families re-balance their finances and get within a budget. On average, I've been able to help most people reduce their monthly debt by $500+. That's without actually giving up anything totally. E.g. having 1.5mb DSL for $29 a month instead of $59 a month for 40mb. $39 a month for normal cable tv instead of $140 a month for every channel. There are some people who truly have some financial problems. But I believe the majority have financial problems because of their own irresponsibility. Living beyond their means. I know growing up, (When dinosaurs roamed the earth). We had 1 TV. 1 family car that was shared. Kids went outside and played; they didn't need 200+ channels of TV. And even in recent years, my kids didn't have a cell phone until they were a senior in high school when they started driving. Too many people don't believe they should have to work and save for what they want and their neighbors have. They think they should have it all too. Even if they can't afford it. And the government encourages debt.

So I'm not trying to stop anyone from opening up a payday loan business. Simply saying that most of the people using that service wouldn't need to if they weren't living beyond their means. Two young people just married can even live decently on 2 minimum wage jobs. If they can't it's because of personal irresponsibility.
Post Tue Jun 23, 2015 6:15 am
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Offshore-Wealth.com
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Lots of regulations for payday loan company in most states, so you better check with local licensing for your state and county.

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Post Sat Jun 27, 2015 1:43 am
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