Working as a payday loan broker can be a richly rewarding experience, both in salary and in the value of helping debt-burdened families get the money they need to meet their financial obligations. This article covers a few of the most important aspects of succeeding in the world of payday loans.
Knowing Your Customer
More than 12 million people every year face financial hardships that necessitate some form of payday loan. These millions of debt-burdened families depend on the quick and simple access to funds that payday loans provide. Without access to this short-term credit, many would be forced into delinquency.
Studies of payday loan use have consistently found that in the absence of payday loan options many people would risk defaulting on their bills. No other financial instrument affords borrowers the same flexibility and accessibility of payday loans -- especially for those without traditional banking relationships. Customers are seeking quick and reliable financing. This makes it especially important to be able to assess customers' needs efficiently and help them to find the right solution.
Promoting the Right Products
There are a wide variety of short-term loan products out there, including traditional payday loans, title loans, cash advances, and same day loans. It's the job of a broker to help customers determine which product will meet their needs, but also to make the sale. Among the many products a broker can offer, same day payday loans are currently the highest demand products in the industry for their quick issuance and high approval rates. Presenting customers with the product that they want and need, in as little time as possible, is key to closing the transaction. The entire process should be effortless for customers and they should walk away confident that they made the right choice.
Understanding Financial Regulations
Payday loans are facing increasing scrutiny by regulators for their ability to be abused. A part of the problem stems from consumers' ease-of-access to payday loan financing. Unlike traditional bank loans, payday loans require no paperwork, no credit check, and no waiting. Most payday loan applications are approved within an hour and paid the same day. While this accessibility is arguably the defining feature of the payday loan, it can also lead to borrowers taking on more debt than they can handle.
Some states, including Connecticut, Georgia, Maine, Maryland, Massachusetts, Michigan, New Jersey, New York, North Carolina, Pennsylvania, Vermont and West Virginia, have prohibited the practice of payday lending or placed sufficiently low caps on the interest rates charged for these types of loans that the loans have become unprofitable for lenders. Most other states, however, have chosen to regulate the industry in an effort to guarantee a fair marketplace for small-dollar loans. In pursuing a career as a payday loan broker, whether independently or through a firm, it's important to know the local laws and regulations pertaining to short-term loans.