Credit Service Organizations: Payday Loan Lenders
CSOs also known as Credit Service Organizations are unregulated companies that are now doing payday loans and other short term loans like auto title loans. It seems that with some recent payday loan regulations, there have been some that have been able to avoid the regulations because they are a CSO. Credit service organizations offer payday loans and other short term type of loans without any limitations on fees they are charging the consumers. However, they were initially created to help register our credit repair companies, not necessarily be a payday lender. According to the dallasnews.com, “CSOs in Texas were originally established to control credit repair businesses; however, in the past few years, small-dollar lenders are operating as CSOs under a statutory loophole that allows them to obtain “an extension of consumer credit” for borrowers.”
Leadpile Lead Exchange works with all sorts of payday loan leads. These are all consumers that are looking for a short term fix to a temporary problem. Based on this article, CSOs are the ones that are doing some of the lending, not necessarily payday loan lenders per say. Bottom line: as a consumer understand any loan you ever take out and the fees associated with it.
So author, does this mean that CSO’s per say can charge high interest rate’s without breaking any laws? Interesting how this is only happening in TEXAS an not in any other state. Hmm, I would be interested in learning if other states have similar Organizations that is not in the public’s eyes? Maybe payday lenders should take a different directions to be able to fund more loans… Just a thought!
1Thank you for the response. Actually from what I am reading CSOs are not just in Texas. They are throughout the US. I am sure we will continue to hear more more about CSOs, as more states start implementing payday lending laws.
2Very interesting! Something I would like to hear more about.
3CSO’s, or Credit Services Organizations have been popular for several years. Payday loan and car title loan operators have been using them with great success.
We’ve been advising our clients in Texas, Colorado, Florida and more that this model can be effective if set up correctly.
Basically, you must create 2 separate and distinct entities; the CSO and the Lender. The CSO markets and services the loan while the Lender funds the loan.
Our major fear is that the CSO model will be abused and regulators will attack it!
JerJer
4Jer, is this something that you would say the majority of payday lenders are currently utilizing? It’s true some lenders might become extreme and then law makers will regulate it but for the meantime what is your feedback with regards to lender usage? Do you feel majority of lenders know about it?
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