With the continued notoriety and media focus on payday loans it’s no surprise that we receive inquiries on a daily basis from entrepreneurs on starting a payday loan business.
The payday loan product is in huge demand by consumers not only in the United States but in the United Kingdom, Australia, the Bahamas, New Zealand, Barbados, Korea, Japan and more.
It’s difficult to estimate the size of the payday loan industry due to it’s fragmentation, the fact that many very profitable payday loan businesses are owned by sole-proprietors and by large, multi-store, multi-national, publicly traded companies. Additionally, we estimate millions of dollars are loaned to payday loan consumers via the Internet every month and no one knows the total volume of these payday loan transactions.
When contemplating entry into the payday loan industry, a few of the issues one must consider include the following:
- The licensing model. If you plan on a “brick-n-mortar” you will need to consider the licensing and regulatory implications. Most states and provinces have specific payday loan legislation. These regulations typically address the maximum amount that can be loaned, the number of days the loan maybe outstanding, the number of “rollovers” allowed (if any), the maximum fees that maybe charged for a payday loan (typically dollars per $100), etc. Additionally, Payday loan Internet companies must decide whether they wish to employ the “choice-of-law model”, the “state model”, the “Sovereign Nation Model, the “offshore model”, the “CSO model”, the “installment loan model”… well you get the picture.
- Payday Loan Software. There are at least 40 different payday loan software programs available in the marketplace today. Some are “web based”, some are focused strictly on payday loans while others offer check cashing, car title loans, pawn, RAL’s, etc. Your software selection is critical to success in managing your company, achieving your financial goals, and penetrating your markets. Payday loan software ranges in price from $300 to several thousand dollars.
- Buy or build. Does buying an existing payday loan business make sense in today’s marketplace.
- Marketing. If you employ the typical payday loan “brick-n-mortar model” (store) you’ll probably utilize the same approach to marketing and advertising that other industries utilize. Direct mail, newspapers (dying), green sheets or pennysavers, local televisions, radio, billboards, etc. all still work. However, we know, having specific experience, that the Internet is cannabalizing the store transactions. Your team will have to address this. You may market via the Internet, purchase leads, generate your own leads, YellowPages.com, web site advertising, Pay Per Click programs, organic search engine traffic, Twitter, FaceBook, YouTube and more all play a role in the paydayloan industry today. Navigating through this will require consideration.
Of course, there are many additional issues that must be considered when entering the payday loan industry and this is just “the tip of the iceberg.” For additional information head over toPaydayLoanIndustry.com to gain further insight into how to start a payday loan business and make money from day one.
Jer Ayles coaches, consults and teaches entrepreneurs and business owners how to start and make money in payday loan, car title loan, check cashing and pawn shop businesses. Jer and his team at Trihouse offer training manuals and courses in addition to hands-on, face-to-face consulting. Visit Jer at http://www.PaydayLoanIndustry.com
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