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Loans Bad Credit Online – Loans Bad Credit Online – Chinese economy: Beijing’s war on the credit boom | Fintech Zoom

Like many small businesses across China, Zheng Weijun’s freight company had struggled to obtain credit from the state-dominated banking system. But in 2018 the 12-lorry business discovered Fincera, a peer-to-peer platform in Hebei province that collected money from retail investors starved of returns and channelled it to borrowers, mainly small trucking and logistics companies.

“We qualified for a Rmb200,000 [$31,000] loan and used it to expand the business,” Zheng says, adding that Fincera charged his company 9 per cent interest annually. “The traditional financial system does not reach down to us.”

Just a year later, however, the credit dried up after Hebei police accused Fincera of “illegal fundraising” — something it denies. “The government shut it down and offers no alternative,” Zheng complains, adding that his company’s recent loan applications have been rejected by state banks. “How are we to judge whether a [P2P] platform is good or bad? We only care that Fincera was willing to offer us a loan.”

Fincera’s founder and chair, Li Yonghui, was detained by police in December 2019 and is awaiting trial. The platform’s operations — it had Rmb9bn under management — are now in limbo, with investors unable to get their money back and borrowers unsure of how to repay their loans.

Li Yonghui, chair of Fincera, a peer-to-peer lender in Hebei province, was detained in 2019 and is awaiting trial. The Chinese government shut down Fincera leaving investors unable to get their money back and borrowers unsure of how to repay their loans © REUTERS

A former Fincera employee, who asked not to be named, argues that “there were no issues” at a platform that was delivering credit to a neglected sector of the Chinese economy. “They completely shut down the business anyway,” he says. “Accounts and systems were frozen, no one could manage anything. The police just took control and asked borrowers to pay the money back, but they are not going to be able to devote much manpower to that.”

Fincera, its clients and investors are collateral damage in a wide-ranging crackdown on financial risk waged by President Xi Jinping and vice-premier Liu He, the Chinese Communist party’s most powerful financial official, for the past five years. While the US is pledging to “go big” as its economy comes out of the pandemic crisis, China’s leaders are focused on the threat of excessive risk-taking in the financial system.

The campaign initially focused on P2P platforms and other components of China’s once rampant shadow banking sector — the off-balance sheet activities that financial institutions used to funnel credit to borrowers, especially those in the private sector who found it difficult to borrow directly from banks. It has since been extended to internet finance and property.

Some analysts warn that in curbing the credit-fuelled excesses of the past decade, Xi and Liu risk an overcorrection that could stifle innovative areas of financial activity and, ultimately, economic growth. From 2016 to 2019, the average annual increase in China’s corporate bankruptcies exceeded 30 per cent.

President Xi Jinping, right, and vice-premier Liu He. Some analysts warn that in curbing the credit-fuelled excesses of the past decade, Xi and Liu risk stifling innovative areas of financial activity and economic growth © Jason Lee/Pool/AFP via Getty Images

“China achieved tremendous catch-up growth by allowing market forces to play a larger role and by changing the incentives driving individual and entrepreneurial behaviour,” says Diana Choyleva, chief economist at Enodo Economics in London. “Top-down party control has been a drawback, not an engine, for growth.”

Zhu Ning, deputy dean at the Shanghai Advanced Institute of Finance, argues that Liu’s approach is necessary to disabuse people of the notion that the government will bail out everyone from individual investors to large banks and bond issuers when their bets go awry.

“The attempt to deleverage and rid the financial system of prevalent government guarantees may induce undesirable consequences and market panic,” he says. “But it is more of a trade-off between short-term and long-term goals . . . China has to work hard on preventing potential risks from interrupting its growth trajectory and sustainability in the long run.”

‘Borrowed money must be repaid’

During Xi’s first term in power, Liu operated in the shadows as one of the president’s most trusted advisers. Yet, even before he became a vice-premier and was promoted to the Communist party’s politburo in March 2018, Liu wielded far more power over financial and economic policy than the country’s premier, Li Keqiang — who is nominally responsible for the economy. Liu’s expansive portfolio now stretches as far as trade negotiations with both the US and EU.

“It is necessary to establish good standards of behaviour, psychological guidance and supervision,” he said in May 2018, shortly after his promotion, “so that society understands borrowed money must be repaid, investment entails risk and those who do evil things will have to pay a price”.

The P2P industry was just one of Liu’s many targets after its meteoric growth — and the collapse of some platforms — raised concerns about the sector’s stability. In the four years to May 2018, outstanding P2P loans soared from just Rmb30.9bn to more than Rmb1tn, according to Wind, a Chinese data provider. By the end of 2019 that figure had more than halved, to Rmb492bn.

Line chart of Value of outstanding peer-to-peer loans in China (Rmb bn) showing The rise and fall of Chinese P2P loans

In addition to targeting P2P platforms such as Fincera, authorities ultimately reporting to Liu have ordered sweeping investigations into the shadow banking sector, overseas investments by some of the country’s largest private-sector conglomerates and large bond issuers responsible for a series of high-profile defaults late last year.

Most recently, Xi and Liu, who also heads the powerful Financial Stability and Development Committee that oversees the central bank and China’s banking and securities regulators, have made global headlines by training their sights on Jack Ma’s Ant Group, China’s largest fintech company.

On Monday, Xi chaired a high-profile meeting that increased the pressure on Ant and other internet platforms. According to state media, the party’s central finance and economics committee warned that “some platform companies are developing in non-standard ways that present risks . . . It is necessary to accelerate the improvement of laws governing platform economies in order to fill in gaps and loopholes in a timely fashion.”

Ant Group headquarters in Hangzhou. Ant’s $37bn initial public offering was scrapped just days after Liu’s financial stability committee warned of ‘the rapid development of financial technology and innovation’ © Qilai Shen/Bloomberg

The outcome of the dramatic crackdown on Ma’s empire and the fintech industry will be a defining moment for the party’s relationship with the private sector, especially as Xi prepares to begin an unprecedented third term in power in 2022.

Ant’s $37bn initial public offering, which would have been the world’s largest had it proceeded as scheduled last November, was scrapped just days after Liu’s financial stability committee warned that “with the rapid development of financial technology and innovation, it is necessary to strengthen supervision in order to effectively guard against risks”. Alibaba, Ma’s ecommerce group, is the subject of a parallel anti-monopoly investigation launched by China’s market regulator.

Not even the all-important property sector, a critical motor for the world’s second-largest economy, has been spared. In November, Guo Shuqing, head of the banking regulator and also the central bank’s top party official, said the real estate industry was the country’s biggest “grey rhino in terms of financial risks”, accounting for about 40 per cent of total bank lending. The pronouncement followed concerted efforts by Chinese regulators to enforce “red lines” aimed at curtailing developers’ leverage.

Chen Long at Plenum, a Beijing-based consultancy, says the real estate market is “the only major bright spot” in otherwise “mediocre” post-pandemic consumption, with property sales now on their strongest run in five years. But, adds Andrew Polk at the advisory group Trivium in Beijing, a reckoning is coming: “One consistently winning bet has been that if Guo calls out a problem, it gets addressed.”

Column chart of Value of outstanding products at year-end (Rmb tn) showing Wealth management products exceeded Rmb30tn before China's crackdown

Financial risk as ‘national security’

In the spring of 2016 an anonymous article by “an authoritative person” was published on the front page of the People’s Daily — the party’s flagship newspaper. It warned about the dangers of the country’s rising debt levels in part due to a Rmb4tn stimulus programme launched in the wake of the global financial crisis. The mysterious author was Liu. A year later, Xi officially designated financial risk as a matter of “national security”.

Such views help explain why the Chinese government’s fiscal and economic response to the coronavirus pandemic has been relatively restrained. Beijing did let overall debt levels climb and tolerated a bigger budget deficit last year. But even as economic output fell almost 7 per cent in the first quarter of 2020 — the first year-on-year decline in decades — it still shunned “helicopter money” largesse and other forms of financial support showered by other governments on their citizenry.

At the annual session of China’s parliament, which closed on March 11, the government also signalled its intention to rein in most of the support measures it authorised last year to help weather the pandemic.

“Last year the economy was driven primarily by the traditional levers of infrastructure and real estate investment, which hit record levels,” says Jeremy Stevens, chief China economist for Standard Bank. “Policymakers, loath to go down this path, felt they had no choice.

The annual session of the Chinese parliament at which the government announced it was to rein in most of the support measures that started last year in response to the pandemic © Nicolas Asfouri/AFP via Getty Images

“[They] know this comes at the expense of tomorrow’s growth, reinforces structural imbalances in the economy and exacerbates over-reliance on credit and infrastructure,” he adds. “China had an already stressed financial system to boot — a reality exacerbated by [aggressive] bank forbearance and lending last year.”

One prominent Chinese financier, who advises the government on policy issues, says he avoided the Ant IPO because of this larger policy backdrop. “To me it was very clear a year ago that [tougher fintech] regulation was just around the corner — capital requirements, licensing for taking deposits and a much lower interest rate ceiling for online consumer lenders,” the financier says.

“Five years ago everybody was talking about shadow banking,” he adds. “Who is talking about shadow banking now? Thousands of P2P lenders have disappeared. It was a long, multiyear process. It is not overnight that this happened.”

When regulators began attacking the shadow banking sector in 2017, the outstanding amount of wealth management products was estimated at Rmb29tn or 40 per cent of gross domestic product, according to official data. At the end of 2020 they were estimated to be worth Rmb25.9tn. But the crackdown made it even harder for smaller, private sector companies, such as Zheng’s trucking business, to access desperately needed credit. China’s private sector accounts for 80 per cent of China’s urban employment and 60 per cent of economic output.

“Squeezing P2P lenders and the shadow banking sector does constrain lending to the private sector,” says Eswar Prasad at Cornell University. “China,” he adds, “seems to take the path of giving innovators a lot of room and then cracking down hard when they grow too powerful or the risks become too large to ignore.” 

Jack Ma, head of Ant Group, made a speech criticising Xi and Liu’s orthodox attitude to financial risk two weeks before Ant’s IPO was abruptly cancelled by the authorities © Aly Song/Reuters

Ma risks it all

Many believe Jack Ma sealed his own fate with a speech on October 24 — a fortnight before Ant’s IPO was abruptly cancelled — when he seemed to criticise Xi and Liu’s financial risk orthodoxy as a penny-wise, pound-foolish strategy. “Very often an attempt to minimise risk to zero is the biggest risk itself,” the entrepreneur said.

The first sign that the Ant IPO might be in trouble came on October 31. And it came via Liu. His Financial Stability and Development Committee declared that “with the rapid development of financial technology and innovation, the relationship between development, stability and security must be properly handled”. Within days top regulators rolled out strict new rules that would curb Ant’s profitability, summoned Ma and senior Ant executives to emergency meetings, and cancelled Ant’s IPO at the direction of Xi.

The committee added that “regulators must do their work conscientiously and treat similar businesses and institutions equally” — a recognition of the longstanding complaints by China’s largest state-owned banks that Ant and other private-sector fintech competitors were benefiting unfairly from a supervisory regime that holds state banks to higher regulatory standards.

Xi has also been clear that his vision is of a future in which ever “stronger, bigger and better” state-owned enterprises continue to dominate the commanding heights of the world’s second-largest economy.

“Security and development are now seen as inextricably linked and security trumps all other considerations,” Choyleva says. “Xi’s focus has been on identifying and pre-empting security challenges rather than [waiting to] deal with them once they arise.”

China’s private sector accounts for 80 per cent of urban employment and 60 per cent of the country’s economic output © Qilai Shen/Bloomberg

Continuing crusade

For its advocates, the fate of Fincera is an example of the excesses of Liu’s war on risk, especially when vague signals from Beijing — in this case about the dangers of P2P lending platforms — are taken to extremes by local officials.

Fincera was the largest P2P platform in central Hebei province, an industrial powerhouse with a population of 75m people. In July 2018, Hebei officials ordered by Beijing to investigate the sector said they had found no irregularities at the platform.

“That made us feel really comfortable,” says one retail investor whose family invested almost Rmb10m in Fincera at the time. “The government said ‘calm down, Fincera is legal’.”

A year later, however, Hebei officials resumed their investigation of Fincera and other P2P companies in the province as part of Liu’s broader crackdown on the sector. “Fincera has been subjected to countless investigations led by the Hebei Financial Bureau,” Li, the company’s chair, said in a social media post in July 2019. He added that his company “satisfies all centrally issued regulations” and is “operationally sound”.

Five months later, Li took his daily pre-dawn walk and never returned. On the same day, busloads of police descended on Fincera’s offices in Hebei and Beijing.

“It was basically all of my family’s savings,” says the investor, who asked not to be identified and now cannot get her money back. She fears she will have to sell her apartment: “We have become economic refugees.”

Such pain, however, is unlikely to deter Liu and his lieutenants from carrying on their crusade.

“We will continue to see a sustained focus on risk,” says Prof Prasad. “Even when they manage to control one aspect of leverage in the economy, it just pops up somewhere else. It’s a never-ending battle.”

Additional reporting by Xinning Liu, Sherry Fei Ju and Sun Yu in Beijing

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Inside the Highly Profitable and Secretive World of Payday Lenders

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Illustration by Sarah Maxwell, Folio Art

When Bridget Davis got started in the family’s payday lending business in 1996, there was just one Check ’n Go store in Cincinnati. She says she did it all: customer service, banking duties, even painting walls.

The company had been established two years earlier by her husband, Jared Davis, and was growing rapidly. There were 100 Check ’n Go locations by 1997, when Jared and Bridget (née Byrne) married and traveled the country together looking for more locations to open storefront outlets. They launched another 400 stores in 1998, mostly in strip malls and abandoned gas stations in low-income minority neighborhoods where the payday lending target market abounds. Bridget drove the supply truck and helped select locations and design the store layouts.

But Jared soon fired his wife for committing what may be the ultimate sin in the payday lending business: She forgave a customer’s debt. “A young woman came to pay her $20 interest payment,” Bridget wrote in court documents last year during divorce proceedings from Jared. “I pulled her file, calculated that she had already paid $320 to date on a principle [sic] loan of $100. I told her she was paid in full. [Jared] fired me, stating, ‘We are here to make money, not help customers manage theirs. If you can’t do that, you can’t work here.’ ”

Photograph by Brittany Dexter

It’s a business philosophy that pays well, especially if you’re charging fees and interest rates of 400 percent that can more than triple the amount of the loan in just five months—the typical time most payday borrowers need to repay their debt, says the Pew Charitable Trusts, a nonprofit organization focused on public policy. Cincinnati-based Check ’n Go now operates more than 1,100 locations in 25 states as well as an internet lending service with 24/7 access from the comfort of your own home, according to its website. Since its founding, the company has conducted more than 50 million transactions.

What the website doesn’t say is that many, if not most, of those transactions were for small loans of $50 to $500 to working people trying to scrape by and pay their bills. In most states—including Ohio, until it reformed its payday lending laws in 2019—borrowers typically fork over more than one-third of their paycheck to meet the deadline for repayment, usually in two weeks. To help guarantee repayment, borrowers turn over access to their checking account or deposit a check with the lender. In states that don’t offer protection, customers go back again and again to borrow more money from the same payday lender, typically up to 10 times, driving themselves into a debt trap that can lead to bankruptcy.

Jared and Bridget Davis are embroiled in a nasty court battle related to his 2019 divorce filing in Hamilton County Domestic Relations Court. Thousands of pages of filings and 433 docket entries by April 26 offer the public a rare glimpse into the business operations of Check ’n Go, one of Cincinnati’s largest privately-owned companies, as well as personal lifestyles funded by payday lending.

The company cleared $77 million in profit in 2018, a figure that dipped the following year to $55 million, according to an audit by Deloitte. That drop in revenue may have something to do with the payday lending reform laws and interest rate caps passed recently in Ohio as well as a growing number of other states.


The day-to-day business transactions that provide such profit are a depressing window into how those who live on the edge of financial security are often stuck with few options for improving their situations. If a borrower doesn’t repay or refinance his or her original loan, a lender like Check ’n Go deposits the guarantee check and lets it bounce, causing the borrower to incur charges for the bounced check and eventually lose his or her checking account, says Nick DiNardo, an attorney for the Legal Aid Society of Greater Cincinnati. After two missed payments, payday lenders usually turn over the debt to a collection agency. If the collection agency fails to collect the full amount of the original loan as well as all fees and interest, it goes to court to garnish the borrower’s wages.

That devastating experience is all too familiar to Anthony Smith, a 60-year-old Wyoming resident who says he was laid off from several management positions over a 20-year period. He turned to payday lenders as his credit rating dropped and soon found himself caught in a debt trap that took him years to escape.

Two things happened in 2019, Smith says, that turned around his financial fortunes. First, he found a stable manufacturing job with the Formica Company locally, and then he took his mother’s advice and opened a credit union account. GE Credit Union not only gave him a reasonable loan to pay off his $2,500 debt but also issued him his first credit card in a decade. “I had been a member [of the credit union] for just two months, and I had a credit rating of 520. Can you imagine?” he says. Smith says he is now debt-free for the first time in 10 years.

Consumer advocates say Check ’n Go is one of the biggest payday lending operations in the nation. But knowing its exact ranking is difficult because most payday lending companies, including Check ’n Go and its parent company CNG Holdings, are privately held and reluctant to disclose their finances.

Brothers Jared and David Davis own the majority of the company’s privately held stock. David bought into the company in 1995, but CNG got its game-changing infusion of capital from the brothers’ father, Allen Davis, who retired as CEO of then-Provident Bank in 1998. Allen sold off $37 million in stock options and essentially became CNG’s bank and consultant.

By 2005, however, the sons were part of a public court battle against their father. Allen accused Jared and David of treating his millions in CNG stock as compensation instead of a transfer from his ex-wife (and the brothers’ mother), sticking him with a $13 million tax bill. In turn, the brothers accused Allen of putting his mistress and his yacht captain on the company payroll, taking $1.2 million in fees without board approval, and leading the company into ventures that lost Check ’n Go a lot of money. Several years of legal fighting later, the IRS was still demanding its $13 million. CNG officials did not respond to requests for comment for this story.

Jared and David split $22 million in profit from CNG in 2018 and, according to the Deloitte audit, CNG’s balance sheet showed another $42 million that could be split between the two brothers in 2019. Jared, however, elected not to receive his $21 million distribution “in order to create this artificial financial crisis and shelter millions of dollars from an equitable split between us,” according to Bridget’s divorce filing.

Worse, she claims, Jared said they would be responsible for paying taxes out of their personal accounts rather than from CNG’s company earnings, making her personally responsible for half of the $5.5 million in taxes for 2019. She believes it wasn’t happenstance that $5.5 million was wired to Jared’s private bank account in December of that same year. Bridget has refused to sign the joint tax return, and Jared filed a complaint with the court saying a late tax filing would cost them $1 million in penalties and missed tax opportunities.

“For the duration of our marriage and to the present, Jared has full and complete control of all money paid to us from various investments we have made in addition to our main source of income, CNG,” Bridget wrote in her motion. She suspects that Jared, without her knowledge or consent, plowed the money for their taxes and from other sources of income into Black Diamond Group, the fund that invests in the Agave & Rye restaurant chain. Beyond the original restaurant opened in Covington in 2018, “they have opened four other locations in one year,” she wrote, including Louisville and Lexington. (The ninth location opened in Hamilton this spring.) Agave & Rye’s website touts its Mexican fare as “a chef-inspired take on the standard taco, elevating this simple food into something epic!”

In his response, Jared wrote, “We have very limited regular sources of income.” He says he isn’t receiving any additional distributions from CNG, the couple’s primary source of income, “and this is not within my control. The company has declared that we would not make any further distributions in 2020 given economic circumstances. This decision is based on a formula and is not discretionary.” Agave & Rye helped produce $645,000 in income for Black Diamond in 2020 but has paid out $890,000 in loans, he says. Through August 31, 2020, he wrote, the couple’s “expenses have exceeded income from all sources.”


The divorce case filings start slinging mud when the couple accuses each other of breaking up their 22-year marriage and finding new partners. Jared claims Bridget began an affair during their marriage with Brian Duncan, a contractor she employed through her house flipping business. Bridget, he says, paid Duncan’s company $75,000 in 2018 as well as giving him a personal gift of $70,000 that same year. Jared says she also bought Duncan at least one car and purchased a house for him near hers on Shawnee Run Road for $289,000, then loaned money to Duncan. Jared says Duncan has been late in repaying the note.

While Bridget says Duncan has been drug-free for several years, he has a rap sheet with Hamilton County courts from 2000 to 2017 that runs five pages long. It lists a half-dozen counts of drug abuse and drug possession, including heroin and possession of illegal drug paraphernalia; assaulting a police officer; stealing a Taser from a police officer; criminal damaging while being treated at UC Health; more than a dozen speeding and traffic violations; a half-dozen counts of driving with a suspended license; receiving stolen property; twice fleeing and resisting arrest; three counts of theft; two counts of forgery; and one count for passing bad checks.

Bridget has fired back that Jared not only is hiding his money from her but spending it lavishly on vacations, resorts, and high-end restaurants with his new girlfriend, Susanne Warner. Bridget says Jared gifted Warner with $40,000 without Bridget’s knowledge, then declared it on their joint tax return as a “contribution.” Bridget’s court filings include photocopies of social media posts of Jared and Warner globetrotting from summer 2019 to summer 2020: vacation at Beaver Creek Village in Avon, Colorado; cocktails at High Cotton in Charleston, South Carolina, and dinner at Melvyn’s Restaurant and Lounge in Palm Springs, California; getaways at resorts in Nashville and at a lakefront rental on Norris Lake ($600 per night); in the Bahamas at a Musha Cay private residence ($57,000 per night), at South Beach in Miami, and at a private beach at Fisher Island; in Mexico at Cabo San Lucas; in the U.S. Virgin Islands at Magen’s Bay and on a private yacht ($4,500 per night); in California at Desert Hot Springs, the Ritz-Carlton in Rancho Mirage, and Montage at Laguna Beach; and in the Bahamas at South Cottage ($2,175 per night).

For her part, Bridget has gone through some of the top lawyers in town faster than President Trump during an impeachment—six in all, two of whom she’s sued for malpractice. She sent four binders of evidence to the Ohio Supreme Court, asking for the recusal of Hamilton County Judge Amy Searcy and claiming Searcy was biased because of campaign donations from Jared and his companies. Rather than deal with the list of questions sent to her by Chief Justice Maureen O’Connor, Searcy stepped down. Two other judges have since stepped into the fray, and in March Bridget filed for a change of venue outside of Hamilton County, arguing she can’t get a fair trial in her hometown. At press time, a trial date had been set for June 28 in Hamilton County.

The poor-mouthing in the divorce case has reached heights of comic absurdity. Jared claims he’s “illiquid” because he didn’t get his distribution from CNG in 2019. Bridget has received debt collection notices for the nearly $21,000 owed on her American Express card and a $735 bill from Jewish Hospital. There’s no sign yet that anyone is coming to repossess her Porsche, which according to her filings has a $5,000 monthly payment. Each party has received $25,000 a month in living expenses, an amount later reduced to $15,000 under a temporary legal agreement while the divorce case is being sorted out. Court filings show that Jared’s net worth is almost $206 million and Bridget’s is $22.5 million.


In the early 1990s, Allen Davis was raising eyebrows at Provident Bank (later bought by National City), and not only because of his very unbanker-like look of beard, ponytail, and casual golf wear. He was leading the company into questionable subprime home loans for people with bad credit and a frequent-shopper program for merchants, though the bank’s charter barred him from getting involved in full-blown predatory lending practices. With guidance and funding from his father, Jared, at age 26, launched Check ’n Go in 1994 and became a pioneer in the payday lending industry. Jared and his family saw there were millions of Americans who didn’t have checking or savings accounts (“unbanked”) or an adequate credit rating (“underbanked”) but still needed loans to meet their everyday expenses. What those potential customers did have was a steady paycheck.

Conventional banks share a big part of the blame for the nation’s army of unbanked borrowers by imposing checking account fees and onerous penalties for bounced checks. In 2019, the Federal Deposit Insurance Corporation estimated there were 7.1 million U.S. households without a checking or savings account.

The Davises launched Check ’n Go on the pretext that it would “fill the gap” for people who occasionally needed to borrow money in a hurry—a service for those who couldn’t get a loan any other way. But consumer advocates say the real business model for payday lending isn’t a service at all. The majority of the industry’s revenue comes from repeat business by customers trapped in debt, not from borrowers looking for a quick, one-time fix for their financial troubles.

Ohio’s payday lending lobbyists got a strong hold on the state legislature in the late 1990s, and by 2018 Democratic gubernatorial candidate Richard Cordray could rightfully claim in a campaign ad that “Ohio’s [payday lending] laws are now the worst in the nation. Things have gotten so bad that it is legal to charge 594 percent interest on loans.” His statement was based on a 2014 study by the Pew Charitable Trusts.

The frustration for consumer advocates was that Ohioans had been trying to reform those laws since 2008, when voters overwhelmingly approved a ballot initiative placing a 28 percent cap on the interest of payday loans. But—surprise!—lenders simply registered as mortgage brokers, which enabled them to charge unlimited fees.

The Davis family and five other payday lending companies controlled 90 percent of the market back then, an express gravy train ripping through the poorest communities in Ohio. The predatory feeding frenzy, especially in Ohio’s hard-hit Rust Belt communities, prompted a 2017 column at The Daily Beast titled, “America’s Worst Subprime Lender: Jared Davis vs. Allan Jones?” (Jones is founder and CEO of Tennessee-based Check Into Cash.) In 2016 and 2017, consumer advocates mustered their forces again, and this time they weren’t allowing for loopholes. The Pew Charitable Trusts joined efforts with bipartisan lawmakers and Ohioans for Payday Loan Reform, a statewide coalition of faith, business, local government, and nonprofit organizations. Consumer advocates found a legislative champion in State Rep. Kyle Koehler, a Republican from Springfield.

It no doubt helped reform efforts that former Ohio Speaker of the House Cliff Rosenberger resigned in spring 2018 amid an FBI investigation into his cozy relationship with payday lenders. Rosenberger had taken frequent overseas trips—to destinations including France, Italy, Israel, and China—in the company of payday lending lobbyists. In April 2019, Ohio’s new lending law took effect and, since then, has been called a national model for payday lending reform that balances protections for borrowers, profits for lenders, and access to credit for the poor, according to the Pew Charitable Trusts. New prices in Ohio are three to four times lower for payday loans than before the law. Borrowers now have up to three months to repay their loans with no more than 6 percent of their paycheck. Pew estimates that the cost of borrowing $400 for three months dropped from $450 to $109, saving Ohioans at least $75 million a year. And despite claims that the reforms would eliminate access to credit, lenders currently operate in communities across the state and online. “The bipartisan success shows that if you set fair rules and enforce them, lenders play by them and there’s widespread access to credit,” says Gabe Kravitz, a consumer finance officer at the Pew Charitable Trusts.

Other states like Virginia, Kansas, and Michigan are following Ohio’s lead, Kravitz says. Some states, such as Nebraska, have even capped annual interest on payday loans. As a result, Pew researchers have seen a reduction in the number of storefront lending op­erations across the country. Even better, Kravitz says, there’s no evidence that borrowers are turning instead to online payday lending operations.

Cincinnati is one of five cities chosen for a grant to replicate the success of Boston Builds Credit, an ambitious effort that city launched in 2017 to provide credit counseling in poor and minority communities by training specialists at existing social service agencies. The program also encourages consumer partnerships with credit unions, banks, and insurance companies to offer small, manageable loans that can help the unbanked and underbanked improve their credit ratings. “Right now, local organizations are all kind of working in silos on the problem in Cincinnati,” says Todd Moore of the nonprofit credit counseling agency Trinity Debt Relief. Moore, who applied for the Boston grant, says he’s looking for an agency like United Way or Strive Cincinnati to lead the effort here.

Anthony Smith is thankful that he’s escaped the downward spiral of his payday loans, especially during the pandemic’s economic turmoil. “I’m blessed for every day I can get paid and have a job during these difficult times, just to be able to pay my bills and meet my responsibilities,” he says. “I’ve always kept a job, but until now I’ve had crappy credit. That doesn’t mean I’m a bad guy.”

Can others worth millions of dollars say the same?

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What’s Questionable Credit and Can I Get a Car Loan With It?

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Questionable’s definition means that something’s quality is up for debate. If a lender says that your credit score is questionable, it’s likely that they mean it’s poor, or at the very least, they’re hesitant to approve you for vehicle financing. Here’s what most lenders consider questionable credit, and what auto loan options you may have.

Questionable Credit and Auto Lenders

Many auto lenders may consider questionable credit as a borrower with a credit score below 660. The credit score tiers as sorted by Experian the national credit bureau, are:

  • Super prime: 850 to 781
  • Prime: 780 to 661
  • Nonprime: 660 to 601
  • Subprime: 600 to 501
  • Deep subprime: 500 to 300

The nonprime credit tiers and below is when you start to get into bad credit territory and may struggle to meet the credit score requirements of traditional auto lenders.

This is because lenders are looking at your creditworthiness – your perceived ability to repay loans based on the information in your credit reports. Besides your actual credit score, there may be situations where the items in your credit reports are what’s making a lender question whether you’re a good candidate for an auto loan. These can include:

  • A past or active bankruptcy
  • A past or recent vehicle repossession
  • Recent missed/late payments
  • High credit card balances
  • No credit history

There are ways to get into an auto loan with questionable credit. Your options can change depending on what’s making your credit history questionable, though.

Questionable Credit Auto Loans

If your credit score is less than stellar, it may be time to look at these two lending options:

  • What Is Questionable Credit and Can I Get a Car Loan With It?Subprime financing – Done through special finance dealerships by third-party subprime lenders. These lenders can often assist with many unique credit situations, provided you can meet their requirements. A great option for new borrowers with thin files, situational bad credit, or consumers with older negative marks.
  • In-house financing – May not require a credit check, and is done through buy here pay here (BHPH) dealers. Typically, your income and down payment amount are the most important parts of eligibility. Auto loans without a credit check may not allow for credit repair and may come with a higher-than-average interest rate.

Both of these car loan options are typically available to borrowers with credit challenges. However, if you have more recent, serious delinquencies on your credit reports, a BHPH dealer may be for you. Most traditional and subprime lenders typically don’t approve financing for borrowers with a dismissed bankruptcy, a repossession less than a year old, or borrowers with multiple, recent missed/late payments.

Requirements of Bad Credit Car Loans

In many cases, your income and down payment size are the biggest factors in your overall eligibility for bad credit auto loans. Expect to need:

  • 30 days of recent computer-generated check stubs to prove you have around $1,500 to $2,500 of monthly gross income. Borrowers without W-2 income may need two to three years of professionally prepared tax returns.
  • A down payment of at least $1,000 or 10% of the vehicle’s selling price. BHPH dealers may require up to 20% of the car’s selling price.
  • Proof of residency in the form of a recent utility bill in your name.
  • Proof of a working phone (no prepaid phones), proven with a recent phone bill in your name.
  • A list of five to eight personal references with name, phone number, and address.
  • Valid driver’s license with the correct address, can’t be revoked, expired, or suspended.

Depending on your individual situation, you may need fewer or more items to apply for a bad credit auto loan. However, preparing these documents before you head to a dealership can speed up the process!

Ready to Get on the Road?

With questionable credit, finding a dealership that’s able to assist you with an auto loan is easier said than done. Here at Auto Credit Express, we want to get that done for you with our coast-to-coast network of special finance dealerships.

Complete our free auto loan request form and we’ll get right to work looking for a dealer in your local area that can assist with many tough credit situations.

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Bad Credit

Entrepreneur Tae Lee Finds Her Fortune

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By Jasmine Shaw
For The Birmingham Times

Birmingham native Tae Lee had plans last year to visit the continent of Africa, the South American country of Columbia, and the U.S. state of Texas.

“I was going to stay in each place for like four to six weeks, and then COVID-19 happened,” she said. “So, I just was like, ‘You know what, I’m just gonna go to Mexico and stay for six months.’”

Once home from Playa Del Carmen, located on Mexico’s Yucatán Peninsula, the 33-year-old entrepreneur put the final touches on “Game of Fortune: Win in Wealth or Lose in Debt,” a financial literacy card game for ages 10 and up.

“We created ‘Game of Fortune’ because we realized there was a gap in learning the fundamentals of money,” said Lee. “We go through life not knowing anything about money and then—‘Bam!’—real life hits. Credit, debt, and bills come at us quick!”

Lee believes the game “gives players a glimpse of real life” by using everyday scenarios to teach them how to make wiser financial decisions without having to waste their own money.

“I feel like [financial literacy] can be learned in ways other than somebody standing up and preaching it to you over and over again,” she said. “You can learn it in ways that are considered fun, as well.”

Which is why “we want the schools to buy it, so we can give students a fun way to learn about financial literacy,” she added.

Lee, also called the “Money Maximizer,” is an international best-selling financial author, speaker, coach, and trainer who is known for her financial literacy books, including “Never Go Broke (NGB): An Entrepreneur’s Guide to Money and Freedom” and the “NGB Money Success Planner High School Edition.” The Birmingham-based financial guru focuses on creating diverse streams of income in the tax, real estate, insurance, and finance industries.

For Lee, it’s about building generational wealth, not debt.

Indispensable Lessons

Lee got her first glance at entrepreneurial life as a child watching her mother, Valeria Robinson, run her commercial cleaning company, V’s Cleaning. Robinson retired in 2019.

“My grandmother had a cleaning service, too,” said Lee. “So, even though I didn’t start out as an entrepreneur, watching my mom and grandma do it taught me a lot.”

Lee grew up in Birmingham and attended Riley Elementary School, Midfield Middle School, and Huffman High School. She then went on to Jacksonville State University, in Jacksonville, Alabama, where she earned bachelor’s degree in physical education. She struggled to find a career in her field and became overwhelmed by student loans.

“My credit and stuff didn’t get bad until after college,” she said. “I was going through school and taking money, but nobody told me, ‘Oh, you’re gonna have to pay all of this back.’”

Before embarking on her extensive career in money management, Lee had not learned the indispensable lessons that she now shares with clients.

“‘Don’t have bad credit.’ That’s all I learned,” she remembers. “Financial literacy just wasn’t taught much. I learned the majority of my lessons as I aged.”

In an effort to ward off collection calls and raise her credit score, Lee researched tactics to strategically eliminate her debt.

“I knew I had to pay bills on time, and I couldn’t be late with payments,” she said.

Lee eventually began helping friends revamp their finances and opened NGB Inc. in 2017 to share fun, educational methods to help her clients build solid financial foundations.

“People were always coming to me like, ‘How do I invest in this?’ and ‘How do I do that?’ So, I said to myself, ‘You know what, people should be paying to pick your brain.’”

Legacy Building

While Lee enjoyed watching her clients reach milestones, like buying a new car with cash or making their first stock market investment, she was also designing “Game of Fortune” to teach the value of legacy building.

“The game gives players the knowledge to build generational wealth, not generational debt,” she said. “It gives you a glimpse of life, money, and what can truly happen if you mismanage your coins.”

Using index cards to create her first “Game of Fortune” sample deck, Lee filled each card with pertinent terms related to debt elimination and credit and wealth building. She then called on a few friends to help her work through the kinks.

Three of her good friends—Barbara Bratton, Daña Brown, and Sha Cannon—were just a few of the people that gave feedback on the sample deck.

“From there I met with Brandon Brooks, [owner of the Birmingham-based Brooks Realty Investments LLC], and four other financial advisors to fine-tune the definitions and game logistics,” Lee said.

Though Lee was unable to land a job in physical education after graduating from college, she now sees her career with NGB Inc. as life’s unexpected opportunity to teach on her own terms.

“Bartending and waitressing taught me that working for someone else was not for me,” she replied. “In order to get the life I always wanted, I had to create my own business.”

In her entrepreneurial pursuits, Lee strives to be an open-minded leader who embraces the need for flexibility.

“COVID-19 has shown me that in entrepreneurship you have to maneuver,” she said. “When life changes, sometimes your business will, too. You may have to change the path, but your ending goal can be the same.”

“Game of Fortune: Win in Wealth or Lose in Debt” is available and sold only on the “Game of Fortune” website: gameoffortune.money. To learn more about Tae Lee and Never Go Broke Inc., visit taelee.money and nevergobroke.money or email tae@taelee.money; you also can follow her on Facebook (https://www.facebook.com/nevergobrokeinc) and Instagram (@nevergobrokeinc).

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