IEG Holdings Building Momentum With Mr. Amazing Loans Brand To Bridge Gap In U.S. Consumer Loan Market
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Medical emergencies, car accidents and appliance breakdowns happen on a daily basis in communities throughout the United States. Unfortunately, saving for these unexpected hardships does not. With two-thirds of Americans living paycheck to paycheck according to the American Payroll Association, this underbanked segment of the population is quick to seek out an immediate and convenient form of small, unsecured consumer loans when faced with economic misfortunes or unforeseen retail needs.
While credit cards can be handy remedies in urgent situations, consumers often find themselves already maxed out or unqualified for a higher line of credit. Many short-term borrowers resort to advances from their bank checking accounts or from payday loan providers such as Cash America (NYSE: CSH) or EZCORP, Inc. (NASDAQ: EZPW) to fulfill immediate financial needs; but in most cases, the full amount borrowed is due the very next payday. This may be sufficient when adequate cash flow is available to retire the debt within a short period of time, however that is rarely the case for this consumer base.
Bridging the gap between these products is newcomer to the United States IEG Holdings Corporation (OTCPINK: IEGH), a state licensed online consumer loan company, which offers this growing demographic a more attractive and fairer alternative. Expanding on its well established record in Australia where it has lent over $48 million to 11,000 plus customers capturing 10% of the country's market share, IEGH is now replicating its business model in the U.S. market, which is potentially 100 times larger according to industry lending and credit reports. A cornerstone of IEGH's successful lending strategies is not exploiting customers when they're at their most vulnerable - a concept that may seem reasonable enough to most Americans but that is positively revolutionary in an industry where predatory practices are common and empathy is often in short supply. Importantly, IEGH recognizes that virtue doesn't have to be a losing proposition; so much so that they are building a rewarding business model around the idea that they distinguish themselves in the marketplace by doing the right thing.
Branded under the Mr. Amazing Loans name and operating as Investment Evolution Corporation throughout the US, IEGH is quickly setting itself apart from payday loan operators on a number of levels that are attractive not only to consumers but to investors as well.
Mr. Amazing Loans has strategically positioned itself as an extremely appealing financial services alternative in part due to its loan structure, which markets advances in amounts ranging from $2,000 to $10,000 at an average APR of 29.9%, including all fees, to a clientele who borrows on average $3,000. This broader loan size enables consumers to affordably cover multiple demands for money from a single source. Payday loan providers, on the other hand, generally issue lesser-sized loans in the $100 to $1,000 range at a staggering average APR of 450% or even higher. Often this smaller payday loan extension is barely enough to address any immediate financial concern, let alone the overwhelming interest, placing consumers in a never-ending cycle of debt as additional loans are secured to "dig out of the hole."
Mr. Amazing Loans, on the other hand, offers a sensible, long-term payment plan that presents consumers with reasonable 3 to 5-year terms broken down into budgeted, 156 to 260 weekly fixed repayments, with no prepayment penalties. Payday loans and checking account advances are not nearly so consumer-friendly; they generally require repayment within two weeks. According to the Center for Responsible Lending (CLR), this type of borrowing typically turns into a loan debt that lasts more than 200 days and requires nine loan transactions to eventually catch up with the first loan's triple digit annual interest rate. It's a problem of national proportions - the CLR reports that approximately 12 million Americans are trapped every year in this cycle, unable to break out of a vortex of 400% interest payday loans.
To address these abusive practices, 17 states and the District of Columbia have already enacted double-digit rate caps on payday loans, typically setting a ceiling of 36%. A number of other states are reviewing their legislation regarding payday loans and interest rate caps, with the continued focus on payday lending by the Consumer Financial Protection Bureau (CFPB) expected to bring about more changes at both the federal and state level. This changing landscape of stronger corporate governance and federal regulations bodes well for companies like IEGH, which brings to market sustainable practices through compliant APRs and lending principles in line with the FDIC small dollar loan guidelines. Adding to IEGH's favorable business model, Mr. Amazing Loans' offerings are strategically structured with the consumer in mind. The loans are fully amortized over the term of the loan; whereas, payday loans are not amortized and are designed to be rolled over.
Perhaps the most significant draw of IEGH's business model versus the inherently riskier payday loan is that customers and investors alike benefit from the company's thorough underwriting practices. Mr. Amazing Loans reduces risk by thoroughly reviewing applicants' bank statements, performing reference checks, and taking similar precautions, all of which helps the company maintain a strong track record of successful collections. IEGH also reports to credit bureaus, helping to build customers' credit for future transactions at more favorable rates and ensuring that consumers' repayment behaviors are accurately reflected in their FICO scores. As a result, Mr. Amazing Loans can be used to establish credit profiles for its consumers - a key point of differentiation from payday loan lenders as a whole, who conduct little to no underwriting and are not necessarily committed to furthering their customers' financial stability.
Last year, the CFPB Director Richard Cordray expressed dismay as "rightly or wrongly, people faced with tough situations often think … payday loans are their only options. It matters on this issue that we all look to develop a more vibrant, competitive market for small consumer loans." IEGH, with its Mr. Amazing Loans product line, is quickly establishing itself as one such alternative.
For more information about IEG Holdings and Mr. Amazing Loans, investors can visit:
ABOUT IEG Holdings (OTCPINK: IEGH)
IEG Holdings Corporation Summary
IEG Holdings Corporation (OTC Markets: IEGH) provides unsecured consumer loans under the brand name "Mr. Amazing Loans" via its website mramazingloans.com. After lending about $48 million to over 11,500 borrowers in Australia, the company entered into the U.S. market in 2008 with a presence in Nevada, Arizona, Illinois and Florida. The company also launched an online loan origination platform in early 2013, partnering with one of the top lead generators in the United States. The company's loans typically range in value from $2,000 to $10,000 and have a term of three to five years with a 20.55% to 34.45% APR. Funded by a $3 million senior revolving credit facility, the U.S. division has already written more than $250,000 in loans since its launch. Significant additional growth is expected from the online loan origination business, which has the potential to scale much more rapidly and at a higher margin than the brick-and-mortar business. For more information visit investmentevolution.com.
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