Offer Semi-Monthly Payments to Improve Subprime Performance
Financial health is built upon the four pillars of smart spending, saving, borrowing, and planning. Taking productive measures in these four areas results in successful financing for day-to-day life, stability in the face of life’s ups and downs, and the capacity to boost financial security and mobility. However, even with increasing financial services and education, 57% of U.S. consumers are financially unhealthy and 56% of U.S. consumers have subprime credit scores, according to the Corporation for Enterprise Development.
Simply put, the majority of American consumers don’t have the means to manage their debt on time, save regularly, create buffer in case of large, unexpected expenses, or set realistic long-term financial goals. In a study done by the Center for Financial Services Innovation on consumer financial health in America, 95-98% of unengaged and at-risk consumers reported that they frequently run out of money before the end of the month and find themselves living paycheck to paycheck. These subprime users are heavily excluded from the financial mainstream and often rely on loans that can entrap them in a cycle of debt.
That’s why lenders like MotoLease LLC are now implementing a semi-monthly payment plan for subprime lessors. Chief Executive and Co-founder Maurice Salter explains that this system, in effect since December 2017, helps consumers pace and budget by reducing each payment amount. Additionally, MotoLease LLC allows debit and ACH billing payments, and is cognizant of payday schedules when charging their lessors.
In a Federal Reserve Bank report, subprime or near-prime individuals were 55% more likely to make semi-monthly payments on their mortgages than without the twice monthly system. In the same vein of thought, if you’re a lender who transitions to a semi-monthly payment plan, you will improve subprime performance, increase consumer financial health, and assist in on time and consistent payments. Short term loans and needs shouldn’t have long term debts and consequences.
Making and receiving these loan payments only gets easier with the services of PayNearMe, which empower consumers with the convenience of making guaranteed payments 24 hours a day and 7 days a week at local, trusted locations. In offering greater flexibility for consumers to make payments through semi-monthly plans and mobile methods, lenders and consumers alike benefit from the speed and security that PayNearMe provides.