Do you know that one United States dollar in 1900 is equal to $30.62 today?
Where did this arbitrary 36% APR cap originate? [Hint: read below!]
By now, the thousands of you who follow my rantings know that effective January 1st, 2020, The Calif. Department of Business Oversight will begin enforcing the 36% APR rate cap [AB-539] on consumer loans between $2500 > $10,000. This bill impacts both title loans and personal loans.
What’s this mean? 70% to 80%+ of the Lenders serving California consumers today will STOP funding these loans and abandon their communities!. 20 million consumers facing temporary financial hardships will have nowhere to turn to for a no-hassle, small-dollar loan FAST!
Click here to read Online: Calif. 36% APR - Devestation - Opportunity
DEVASTATION
Jorge Jones has a landscaping job in Los Angeles. His wife Francis works at a restaurant. Auntie, who lives 14 miles [a rent-controlled one-bedroom apt.] and 4 bus routes away, takes care of the Jones’ two kids.
Jorge’s 12-year-old Toyota pickup needs engine work. The bank turned Jorge down for a loan. Jorge’s credit card is maxed. He’s already borrowed from friends and family in the past; owes them money.
Mary, single with a 3-year old daughter, works for 2nd Chance Community Loans, a chain of 15 small-dollar loan stores in So. Calif. She knows the 1st names of all her customers, their kids’ names, their family situation… Her customers borrow money a few times per year when the washing machine breaks down, the oven takes a dive, the family car needs work…
They all live paycheck to paycheck; virtually no savings in spite of having tried. Life happens…
Carlos owns 3 strip malls. One each in Garden Grove, Santa Ana & Costa Mesa. He’s 55 years old. Worked his ass off as a carpenter, saved money, read real estate books, invested with a buddy in a run-down strip mall, refurbished it and eventually added two more. Each strip mall has the usual mix of Circle-K, a couple of restaurants, dry cleaner, a 2nd Chance Community Loan franchise…
Carlos just received “The Letter.” 2nd Chance community Loans is pulling out of California…
TitleMax just announced they are abandoning California!. Forced by Sacramento, academics, several large California lenders with access to low cost capital and the knuckleheads on the left-coast who have no clue what this means to average Californians who cant't get their hands on $400 cash in an emergency, [Read details below!}
The Costs for Producing a 36% APR Loan
So what you say, dear reader? A $2500 loan at 36% interest is ridiculous anyway! “Good riddance to these loan sharks!”
Where did this arbitrary 36% APR cap originate?
Do you know that one United States dollar in 1900 is equal to $30.62 today?
It’s called INFLATION! Back in the early 1900s. A $36 dollar simple interest loan fee on a $100 loan principal in 1900 was substantial enough to service “loan production costs” and generate a “fair” profit back in “the good old days.”
The National Commission on Consumer Finance, updated by Durkin, Elliehausen, and Hwang concluded this Commission’s Report in 2013 dollars that a $1000 fixed-rate loan in 2013 dollars with current “production costs: insurance, Social Security, FICA, pensions, rent, employees, marketing, servicing, legal, compliance, tech…] breakeven at 77.86% APR. A $2,100 loan at 42% APR and a $2,600 loan at 36% APR!
No company, other than banks and credit unions who literally get money free from the FED [taxpayers], can service the subprime demographic with a 36% APR! [Actually, a Pilot Program was started in California in 2011 and died a quick death. Banks stated, “they could not make any money!”] Banks do not want to serve the subprime and their need for a few hundred dollars! They make billions of $$$ in NSF fees!
Thus, millions of US residents beginning in Calif. on January 1st, 2020 [AB-539] will HAVE NOWHERE TO TURN when facing a financial emergency. Dental, fix the car to keep a job, prescriptions, avoid an NSF (banks & credit unions love these fees]…
Lenders are already leaving California in droves. So is everyone else but that’s a different topic! TitleMax announced to The Calif. Department of Oversight they, and their 100+ stores are leaving California. More Lenders are leaving. Who will turn off the lights?
Lock your doors! Buy stock in tent manufacturing companies. The homeless will soon swell to an extent we have not witnessed since the “Great Depression.”
Need more proof? 2 years ago the UK Financial Authority annihilated the payday loan industry. “But after two years the applause has stopped, replaced by fears over whether the payday assault has inadvertently led to a slew of new headaches for borrowers. The FCA, led by Andrew Bailey, is investigating what impact the cap has had on borrowers. Early evidence from industry groups and debt charities point to a growing number of people locked out of credit markets or pushed
into other forms of high-cost loans.“You can regulate away the supply but you can’t regulate away the demand,” said MoneyAdvice Trust’s Jane Tully, who welcomed the payday cap but is concerned problems have been displaced elsewhere.”
OPPORTUNITY
My Team has invested hundreds of man-hours researching, talking and meeting with savants in “the business of lending money to the masses.” It’s been a whirlwind of action and creativity. The results? Success.
Collateralized [Title] Lenders: Don’t abandon your California consumers and your employees in need of your help! If you’re a title loan lender, you can remain in business by submitting to this crazy 36% APR while offering “Lender Collateral Protection” to your customers in dire need of your help while still earning a very respectable ROI.
And, since the majority of your competitors are not reading this, YOU CAN EASILY SCALE and TAKE MARKET SHARE! A 25-year-experienced, Triple A-rated insurance company executive Team has a complete turn-key solution ready for you to implement in <30 days! Your out of pocket start-up costs to get up and running?
MINIMAL! Reach out to TrihouseConsulting@Gmail.com [Jer] for more information.
If you prefer to simply close your stores, walk away, sell your title loan portfolios, and choose another path, again: TrihouseConsulting@Gmail.com
Non-Collateralized [Personal Loan/Installment] Lenders: There is another proven strategy for you as well for not only California Lenders but Lenders everywhere. Reach out to one of our sponsors: LeaningRockFinance.com or TrihouseConsulting@gmail.com for an intro.
ATTENTION ALL LENDERS: There is an ongoing national debate regarding the implementation of a 36% APR cap across the USA. Bills are being introduced weekly in D.C. This may not appear to be of interest to you today if you operate in an “enlightened” State where consumers are not considered too dumb to know how and when to spend their own hard-earned money. But know that YOU are in “Big Brother’s” sights.
