On-Line Payday Loans Will Finish The Year at Right About 33 Million Transactions. Revenue For The On-Line Sector is Expected to Come in at Around $3.2 Billion.
Today, we are pleased to bring you a Company that is focused on short-term consumer online lending. Commonly known as Payday advance loans, which are small, short-term, single-payment loans of generally $500.00 and less that are intended to carry the customer through a temporary cash deficiency. These loans typical have a fee assessed in the $15 to $30 per $100 loaned range. Under the Internet lending platform, the lender receives the customer’s consent to ACH (Automatic Clearing House) to direct debit the customer’s personal checking account on his or her next payday for the amount of the loan and the finance charge. Current conditions in the U.S. provide ideal conditions for maximizing this Company’s profit potential and grow quickly.
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2011 is Expected to Show a 18% Growth Overall For The Sector
The industry makes a big deal about the two types of people that use these types of services. The two types are: The unbanked- who use check cashing services and the underbanked. The underbanked are defined as people that have a transaction account (e.g. a checking or savings account or both), but still use Alternative Financial Service Providers. These are the only customers that the featured company is going to market their services to, which is about 20 percent of the U.S. population.
Payday advance loans are small, short-term, single-payment loans of generally $500.00 and less that are intended to carry the customer through a temporary cash deficiency. These loans typical have a fee assessed in the $15 to $30 per $100 loaned range. You would think that qualifying for a small online loan would be rather easy but in fact, the underwriting that goes into the decision to make a loan to a consumer has in it over 100 different variables of consideration.
Finding Quality Prospects:
There are 100’s to 1000’s of lead generating companies that exist today and quite a few specialize in finding prospects that are interested in a small loans. The featured company deals exclusively with 4 of the top lead generating sites and depending upon the credit worthiness of the customer, will determine the criteria amount that the consumer must go through to be approved for a loan. What is real nice about the 4 companies that they use, they do not charge the client for the lead until the customer in question has been approved and accepts the loan.
Targets:
The average online loan borrower is not what one could be led to believe. The estimates of income range from $20,000 to $50,000 for most borrowers. Some demographic studies indicate that nearly 50% of payday loan borrowers own their homes, and most have a high school education or more. The average age is between 20 and 40. The most liberal estimates of payday loan use indicate that 20 % or fewer of the American population have actually used a payday loan.
The average borrower is the near epitome of the middle class American, which does not make up the majority of the U.S. population due to the shrinkage of the middle class in general. The demographics of payday loan use also differ between online payday loan borrowers and store front borrowers. In fact, more than 50% of a sample of 736,369 online applicants who applied June 10 to July 11 of 2010 own their own home and make an average of $41,753 annually. Out of those applicants, the ones who passed initial underwriting criteria for approval, 45.2% owned their own home and made an average of $47,260 annually.
Payday Loan Industry:
The Consumer Loans may include any or all of payday loans, consumer installment loans or line of credit loans. While all of the following loan types are relatively similar, the following sets forth a brief description of the payday loan industry. The payday lending industry is one of the fastest growing businesses in not only the United States, but in Canada, Australia, England, New Zealand, South Korea and the Caribbean. The industry was virtually nonexistent in the early 1990s, while estimates of present market size now range from $35 – $50 billion dollars in loans originated per year. Fees generated from these loans approximate $6.5 billion annually, while one payday advance group reported that over $25 billion dollars in payday loan revenue occurred in recent years, with 100 million transactions taking place and 12 million households being served. The payday loan industry has seen recent historical growth rates exceed 60% per year, with an estimated sustainable near term future growth rate predicted to be 30% per year.
Millions of customers search for payday loan companies on the Internet every month. At just three of the major pay-per-click search engines, the search term “payday loan” approximately 839,000 times per month. These three search engines represent approximately 30% of all searches, putting estimates of searches for “payday loans” at 2,800,000 per month. Additionally, it is estimated that users enter the search term “cash advance” 734,000 times per month. Furthermore, users perform many more searches were also performed based on various derivations of these search terms.
The payday borrower demographics’
• 100% have steady income and jobs.
• 100% have checking accounts.
• 94% have High School Diplomas.
• 56% have College degrees.
• 68% are under the age of 45, while 3.5% are 65 or older.
• 64% have children.
• 42% own homes.
• 57% have major credit cards.
5 Top reasons why people get a Payday Loan: (Have you been in this position?)
- To Avoid Overdraft Fees: This is the number one reason why many people take payday loans. Banks on average charge $35 per overdraft and if there are several transactions, that means that they are going to be several $35 fees that could create a great financial burden on consumer. Taking a payday loan with simple fee, could save consumers from that financial hassle.
- To avoid late fees on rentmortgage: Some States have no restrictions on late payments so landlords can charge high late fees, in some cases reported as high as 20% of the rent, if the tenant is late or short on rent. So it seems that many consumers refer to payday loans to avoid such late fees.
- Auto Related Expenses: Many consumers take payday loans to pay for sudden auto repair or if their vehicle has been impounded. Payday loan customers rather pay a flat small fee than having to without a car, which they need to support their families.
- Pay Medical Bills: More medical centers are denying patients without insurance or some sort of payments. So many Americans especially those without a reliable health insurance borrow money to see their doctors.
- Buy Grocery: Larger middle class families who live paycheck to paycheck need rely on short term loans and payday loans to cover grocery costs when they are short on cash.
Management and the Board have vast experience in consumer loans.
CEO –Has worked on projects over $150 million. Secured single loans in excess of $50 million from lenders as well as having secured millions of dollars in public financing. The CEO has taken many businesses from an idea stage and followed them through permitting, design, construction, and successful operation. He has extensive success working with municipalities, lenders, attorneys, CPA’s, HOA, GM’s, architects, engineers, construction managers and marketing companies to obtain the desired goals for the individual projects. CEO also has quite a few articles written about him or his companies in: Chi Tribune, Chi Sun Times, Milwaukee Journal/Sentinel, Wisconsin St Journal, DesMoines Register, San Diego News and Cape Cora Daily. Several magazines such as, Golf Digest, Conde Nast Travel, Midwest Golf, Golf World, Wisconsin Travel and Madison Magazine, have done small column articles to full blown cover stories.
The Opportunity:
The Company is looking to secure its first round of external funding of $2 million to launch its service offering and expand its sales strategy. Please send me an e-mail or give me a call to request a full package and we will have the Company forward the material to you.
