CASHNETUSA VS MOBILOANS COMPARISON

In the ongoing comparison of CashNetUSA and Mobiloans we need to review how well these loans are available to the average borrower.  Earlier, in the article about CashNet versus all the other Native American lenders, we used Mobiloans as the tribal lender to compare the finance fees that each of these companies charged their customers for roughly equivalent loans.  If you didn't read that piece, it can be summarized in one quick way which is CashNetUSA completely defeated Mobiloans in the straight comparison on interest rates.  Mobiloans charged more than double the amount that CashNetUSA made customers pay, and ironically the CashNet loan was for a longer amount of time.  

So Mobiloans didn't do too well when looking at just the interest rates.  And they didn't do really too great in terms of the length of the loan, either.  But how about other factors that involve getting a loan, like for instance actually qualifying for the loan itself in the first place.

This is where CashNetUSA will strike out for a lot of hopeful customers.  Is there a catch in getting the better rates with CashNet?  You bet there are and the catch is that you need to be in decent financial shape or else they will not be issuing you the loan.

Here's how it works...

A lot of state governments have now set-up financial bureaus or agencies, some type of government office.  All of the short-term lenders that operate in that state have to agree to report loans that they originate to that state financial office.

Not a big deal, right?  So far so good, but it gets worse as you will see.

So as the state agency maintains this database of who is borrowing how much money in each state, the rules that govern these short-term (read that as payday and installment loan) lenders start to come into play.  One of the rules they have established is that if you have a current short-term loan (or in some states it is two loans) outstanding you may not borrow another loan until those existing loans are paid off.  Now that can create a big headache, especially if you get a deal on a larger loan that could be used to pay the existing loan and you would have some extra money left (from the second loan) to use for yourself.

Too bad.  The state agency is going to bar you from that loan.  Another problem is that if you have a short-term loan that you default on, or are in arrears trying to make payments to get the past due loan paid off, then this piece of data will prevent you from getting a new loan.  This can be a real problem for consumers that deal in short-term loans.

Here is a true story that has taken place in the state of Illinois...

Consumer Z wants to pay off his short-term loan that is two months past due.  That past due loan keeps accumulating fees and penalties, so it would be a really good idea to get it paid.  That same consumer finds another loan shop, let's use CashNetUSA as the example, and gets approved for a $600 installment loan.  Consumer Z also qualifies for 25% off the already (relatively) low interest rate, so things are even better. 

But then the phone rings and it's CashNetUSA on the line.  CashNet tells Consumer Z that they cannot go ahead with the loan, even though he was approved already.  Now this casuses a good deal of consternation to the consumer, who asks why he can't have the loan, especially if he was already approved?  The answer is that as CashNetUSA was processing the loan it hit a snag with the state government of Illinois, specifically it was red flagged against that original loan that is past due on the books, which was reported to Illinois by the original short-term lender.

Now if this isn't the catch-22 what is?  Consumer Z wants to pay off the past due loan to the original lender, but the original lender reported Consumer Z to the state of Illinois, which they are required to do by law.  Now Consumer Z has a second lender who will provide money (at a better interest rate) and he can make good with the past due loan (from the original lender) but in fact he can't. 

Since he was reported to the state of Illinois he can't get the loan to repay the past due loan, and everyone is a loser.  The original loan company will not get their money on the past due loan, the new lender (CashNetUSA) will not get the business they thought they were getting, and Consumer Z is still stuck with the original loan getting all types of fees every 14 days.

This is the type of encounter or situation many people find themselves in who borrow from regular (state regulated) lenders.

Now let's compare that to Mobiloans.  Yes, Mobiloans charges substantially higher interest rates (double) and the loan is due in less time that the CashNetUSA loan, but you can actually get the loan no matter what is going on with other lenders.  That's because Mobiloans is a tribal lender, with full sovereignty from the states and the federal government.  The state regulators have no jurisdiction over Native American lending firms, so Mobiloans is going to check if you have past due loans with other lenders.  They are not going to check the big three credit agencies, they are not interested in your credit score or credit report.

Mobiloans, just like most tribal lenders, is operating in their own format.  That means when you approach them for a loan, they are going to look at exactly what you have right now, at this point in your life.  Do you have a job?  They might ask how long you've been on the job but often they do not.  Are you 18 years old?  Of course the answer is yes.  Do you have an active checking account?  Most people will say yes to that question.

That's it.  In most circumstances you are getting the loan at this point.  And it won't take long either, usually less than 48 hours.  So in this scenario you are able to quickly pay the past due loan and get current.  Mobiloans usually has a 16 or 20 week loan repayment schedule so the consumer can have some time repaying them.  Obviously, it's better to pay some principal along the way but it's not required.  The point is the past due loan is gone and the consumer is square again, no pestering letters or collection phone calls. 

This is what the regulators in states like Illinois and New York don't get.  They don't like high interest loans, but when they cut those loans off they create a new set of problems which basically consist of flat economics.  Consumers are going to be dead in the water with zero source of credit.  Now, how that helps consumers is yet to make sense to me.  Paying high interest isn't good, but having nowhere to turn is not much better.

That's a big reason companies like Mobiloans, Clear Creek Lending, Plain Green Loans, and Great Plains Lending exist in the first place.  No one wants high interest loans, but people do need to have some access to credit.  There are no other sources, they are gone.  Banks, credit unions, lending stores, they all want proof of resources and credit histories that 50% of Americans just do not have. 

To say that a company like Mobiloans should not exist is to say, in effect, that 50% of Americans should have zero opportunity for any credit, at all, in all situations.  That's just not realistic.

Comments

[loan payday guy]

This is a topic which is near to my heart... Many thanks!

[Cash Net Wins]

Hands down go with Cash Net, no way any of the tribals can compete when them.