UStatesLoans.com

A couple of days back my attention was drawn to the US Payday Loans Lenders Recourse website: UStatesLoans.com .You can read more about this outfit here:Link

For those of you who need some background about payday loans:

A payday loan (also called a payday advance) is a small, short-term unsecured loan, “regardless of whether repayment of loans is linked to a borrower’s payday”.The loans are also sometimes referred to as “cash advances”. Payday advance loans rely on the consumer having previous payroll and employment records. Legislation regarding payday loans varies widely between different countries and, within the USA, between different states.

Payday loans carry substantial risk to the lender; they have a net default rate of 6%,and defaults apparently cost payday lenders around a quarter of their annual revenue.So interests rates are high. Eg.For a $15 charge on a $100 2-week payday loan, the annual percentage rate is 26 × 15% = 390%.To prevent usury (unreasonable and excessive rates of interest), some jurisdictions limit the annual percentage rate (APR) that any lender, including payday lenders, can charge. Some jurisdictions outlaw payday lending entirely, and some have very few restrictions on payday lenders.In practice, consumers  rely on the flat pricing signal in dollars and cents when determining whether or not to use a payday loan.

The basic loan process involves a lender providing a short-term unsecured loan to be repaid at the borrower’s next payday. Typically, some verification of employment or income is involved.Though some payday lenders do not verify income or run credit checks.Individual companies and franchises have their own underwriting criteria.

In the traditional retail model, borrowers visit a payday lending store and secure a small cash loan, with payment due in full at the borrower’s next paycheck. The borrower writes a postdated cheque to the lender in the full amount of the loan plus fees. On the maturity date, the borrower is expected to return to the store to repay the loan in person. If the borrower does not repay the loan in person, the lender may redeem the check. If the account is short on funds to cover the check, the borrower may now face a bounced check fee from their bank in addition to the costs of the loan, and the loan may incur additional fees and/or an increased interest rate as a result of the failure to pay.

In the more recent innovation of online payday loans, consumers complete the loan application online (or in some instances via fax, especially where documentation is required). The loan is then transferred by direct deposit to the borrower’s account, and the loan repayment and/or the finance charge is electronically withdrawn on the borrower’s next payday.

Payday loans are popular in the UK,US,Canada and Australia.They serve working class people and those in distress in the same way as the more traditional pawn stores do. UStatesLoans is for US citizens of over 18 years only,

Whatever our personal feelings about taking out high cost loans,because a person is in a financial mess,there is no denying that there is a need for such services.In India we have gold loans companies serving as pawn shops and a thriving private personal finance market catering to those who have nothing other than their capacity to earn in future to draw upon to raise immediate cash.Banks provide personal loans but have stricter lending criteria and not all potential borrowers work in the formal sector and in companies and levels that qualify for personal loans.

UStatesLoans.com connects potential borrowers with potential lenders of payday loans.The links to laws relating to payday loans,the alternatives to payday loans, the different types of payday loans ,scams and warning signs to look out for and payday debt consolidation,negotiation and settlement options bring a lot of relevant information together for potential borrowers.And more importantly there is a well organized data bank that lists local payday lender services and allows for user rating of these services.

Readers, anybody interested in building such a website for Indian borrowers and lenders?We have bank loan broking services online but none that I know of bringing together potential borrowers and  private financiers.