Payday Loan Industry Facts and Stats

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Payday Loan Industry Facts & Stats

So, why is this so? Why is the payday 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, 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!

Not only are the fantastic profits luring entrepreneurs to the payday loan industry but consumers throughout the world have an insatiable demand for the payday 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!)

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)
• 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.
• Payday loan lead generating companies sell 20,000 plus leads per month for an average $25 to $185 each to payday loan operators. Note: in a recent Cash America conference call CEO Daniel R. Feehan stated as much. Here is a publicly traded payday loan company 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 payday loan stores, attending OLA, FISCA & CFSA Conventions, analyzing the earnings reports for the publicly traded payday 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!
• 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.

Payday loans 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, they get the cash they need before their next payday!!

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

Payday Advance 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 payday loan product to their existing services.)

A paycheck loan or paycheck advance 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 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 both the payday loan store model and the Internet model

• Table of Contents
• Covers both store and Internet payday loan businesses
• 400+ pages
• To Be Successful, Do This
• Our Goal
• Macro-Overview of PDL's & Micro-Lending
• Hang-in There Payday Loan Fans, The Future is Ours
• Flash it's a Whole New Business - Quick hits and last Minute Observations
• 1st Look at the Internet Model
• Payday Loan Business Analysis
• Payday Advance 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
• PDL Software (LMS)
• Electronic Funds Transfer
• Demand for Internet PDL's
• Marketing Other Than Search Engines
• Purchasing Payday 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
• PDA Demographics
• Marketing, Branding and Advertising
• Tactics & Strategies
• Site Selection
• Payday Loan & 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 PDL Business
• Bonds
• Western Union Services
• Checklist Magazine
• List of State Regulatory Agencies
• Definitions
• Guide to Buying a Franchise
• Legal Resources - Lawyers
• Business Plan
• Final Thoughts on the Industry
• Payday Loan Contracts & Disclosure Forms
• Discussion of alternative methods for conducting Payday advances. (Internet Service Provider/cash rebate, Sale-Leaseback, Catalog sales, etc.
• Includes our Canadian Payday Loan Resources when we ship to Canada
• Includes our Payday Loan Software Report
• Includes Australian PayDay Loan Report when we ship to Australia