The World of Payday Lenders




Agenda


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What is a traditional Short Term Loan/Payday Loan?

  Loan Amount:        $100 -$1000
  Loan Term:          4 days to 37 d...
Payday Advance APR’s are often Lower than
Alternatives-Compare $100 Payday loan

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Typical Payday Store Metrics
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Short Term Loan Metrics

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6 Reasons Credit Unions Should
Participate in Short Term Lending
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6 Reasons Credit Unions Should
Participate in Short Term Lending
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6 Reasons Credit Unions Should
Participate in Short Term Lending
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Key to Short Term Lending
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Closing
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The World of Payday Lenders_2009

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Handout provided courtesy of the Illinois Credit Union League, a REAL Solutions Partner League

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The World of Payday Lenders_2009

  1. 1. The World of Payday Lenders Agenda ! "# $ % $ & ' & ( )*)+
  2. 2. What is a traditional Short Term Loan/Payday Loan? Loan Amount: $100 -$1000 Loan Term: 4 days to 37 days (average 14 days) Loan Fee: $10 to $30 per $100 borrowed Typical Criteria: Must have a job and a paycheck Must have a checking account Limited Credit Check ,Most use sub prime industry credit bureaus Teletrack, CL Verify, Lend Protect Do not use traditional FICO scoring Loan amount typically based on a % of income Financial Graduation Theory - . -* * -/ ( - . &$ $ & - ! (1 - $ & 2$ - $ ( $ . - . $ ( -! % -# $ & 0 $ ( $
  3. 3. Payday Advance APR’s are often Lower than Alternatives-Compare $100 Payday loan %" %! % $ # " ! Short Term Loan Customer Profile & Facts "45 67 8 65 . "7 4 5 $. $ $ $ 1 8 7 5 9 $. 6 5 2 $ 2 $ 5 $. . $ ( "5 2 $ $ :45 * # 5 . $ 1 . . 8 52 2 $$ . & '( & ! ) ( ( & 3
  4. 4. Typical Payday Store Metrics ; 9< 7 3 . $ . <: = $ 9 7 1 $ *. > 7 3 *. :< ? 75 7)3 5@ * 9 > 7 1 $ *. $ 9" > 1 1 *. $ 96 > = $ *. 9 > 1 $ Payday Loan - Growth A , $ ",%. 7 % > . 4/ #. << %. 7! . 4 ! 2$ B. % 5 * 71 1 $. 1 1 3 % 7 . 1 . $ 6
  5. 5. Short Term Loan Metrics Total US Marketplace Store Fronts % Internet % Total Est Number of Stores/Portfolios 25,000 98.2% 450 1.77% 25,450 Est Avg Outstanding per Store $ 69,000 $ 1,000,000 $ 85,462 Est Avg Total Outstandings $ 1,725,000,000 79% $ 450,000,000 21% $ 2,175,000,000 Est Avg Principal Written Annually $ 44,460,000,000 79% $ 11,818,481,013 21% $ 56,278,481,013 Average Fee Amt per Hundred $ 17.50 $ 27.50 Fee Income Written Annually $ 7,780,500,000 71% $ 3,250,082,279 29% $ 11,030,582,279 Average Loan Size 325 395 Est # of Transactions Annually 136,800,000 82% 29,920,205 18% 166,720,205 Illinois Payday Lending Facts # * 4 7 =) !C > 7< 1 7 > 2 % 1 ? @ : ) 1 $ $ 67 . !C * B > 75 $ ! & B3 !C & B 67 DC #1 B 37 1 2$ 7
  6. 6. 6 Reasons Credit Unions Should Participate in Short Term Lending %. 75 $ %. $ (1 2 1 $ $ )1 1 E 6 Reasons Credit Unions Should Participate in Short Term Lending $. $ 11 1 = 1 C $ 2 1 * $. ? @ "
  7. 7. 6 Reasons Credit Unions Should Participate in Short Term Lending * . 2 $ & B "45 67 4 5 $. $ $ $ 1 6 5 2 $ 2 $ 5 $. $ ( F2 ( 1 2 6 Reasons Credit Unions Should Participate in Short Term Lending . 1 . . $ G. 1 . ( $ $ ! $. . :
  8. 8. 6 Reasons Credit Unions Should Participate in Short Term Lending D * 2$ 11 - 1$ - = -+ D 1 $ 2 2 $$ 6 Reasons Credit Unions Should Participate in Short Term Lending $. $ $1 A 2 $ #; 1 1 1 2 $ 2 * )1 4
  9. 9. Key to Short Term Lending ' 1 $ 2 ! % ! ! $. 2 ( >7 ? 1 & > )> 3 = : @ * 2$ 2 2$ . 3 1 Key Take-A-Ways: Short Term Loans & $ $ 97 2 1 * $ 1 1 . 2 $ 2 $ $ 1 & 1 $ $ $ $$
  10. 10. Closing H I & $ B * + (, G $ ' / & 2 $( J 1 < / <& 2 J < 7 ): 3) 73 * + 12 J ( < J < Thank You!!

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