Loan program and process for transacting the same

Abstract

A loan program and process is structured to provide a significant end-to-end cost savings while overcoming many, if not all, of the drawbacks and regulatory obstacles present in the current payday loan industry. The program, the end-to-end process, and the arrangement thereof, permits a lender to offer short-term, small cash loans to employees through an employer controlled payroll system. Access to the employer controlled payroll system is achieved through an agreed upon relationship between a coordinator, a lender, and the employer. As part of the agreed upon relationship, the lender guarantees that all fees, interest, and other ancillary costs over and above a principle amount of the short-term, small cash loan will be kept at or below a predetermined annual percentage rate (APR). In addition, the loan is repayable over a number of payroll cycles such that each successive payday the principle balance of the loan decreases.

1 . A method of coordinating a loan program, comprising:
 executing a contract between a first entity and an employer to provide a loan program that is offer-able as a benefit through the employer to employees of the employer, the contract having at least an agreed upon annual percentage rate per annum that includes fees, interest, and other ancillary costs, which taken in total provides an overall interest rate that is less than or equal to the agreed upon annual percentage rate per annum; and   deducting loan payments directly from paychecks of the employees and transmitting the loan payments to a lending entity to reduce the representative outstanding loan balances of the employees with outstanding loans.   
   
   
       2 . The method of  claim 1 , wherein executing a contract between a first entity and an employer includes executing a contract between a coordinator and the employer. 
   
   
       3 . The method of  claim 1 , wherein deducting loan payments directly from paychecks of the employees includes making a line item loan deduction when processing an employee payroll. 
   
   
       4 . The method of  claim 1 , wherein having at least the agreed upon annual percentage rate per annum includes agreeing that the agreed upon annual percentage rate per annum is to be in a range of about 0%-36%. 
   
   
       5 . The method of  claim 1 , wherein deducting loan payments includes executing an auto-deduction over a fixed number of payroll cycles. 
   
   
       6 . A method of providing a loan through a loan program, comprising:
 receiving a loan request from an employee of an employer through a loan request system;   determining a principle amount of the loan based on at least one underwriting parameter;   determining a total amount of the loan based on an overall interest rate applied to the principle amount of the loan, wherein the overall interest rate is not greater than a threshold annual percentage rate per annum established by the employer; and   determining a loan payment amount that allows for recouping the total amount of the loan over a predetermined number of payday cycles.   
   
   
       7 . The method of  claim 6 , further comprising providing information to an employer about the loan program, wherein the employer passes the information to employees through employer information distribution channels. 
   
   
       8 . The method of  claim 7 , wherein providing information to the employer about the loan program includes making a sales presentation to the employer. 
   
   
       9 . The method of  claim 6 , wherein receiving the loan request from the employee includes receiving the loan request through an internet portal. 
   
   
       10 . The method of  claim 6 , wherein determining the principle amount of the loan includes verifying an employment status of the employee. 
   
   
       11 . The method of  claim 6 , wherein determining the total amount of the loan includes verifying a value indicative of an average, monthly, net paycheck for the employee. 
   
   
       12 . A method of receiving loan payments for a loan, comprising:
 approving a loan request by an employee;   determining a number of loan payments to be deducted from a paycheck of the employee by a payroll department, wherein a total value of an amortized number of loan payments includes a total amount of interest that does not exceed a threshold annual percentage rate per annum established by an employer;   deducting at least one loan payment from the paycheck of the employee; and   transmitting a monetary value of the at least one loan payment to a lender via a predetermined money transferring system.   
   
   
       13 . The method of  claim 12 , wherein approving the loan request by the employee includes sending an electronic notification to a lender, an employer, and the employee verifying the approved loan request. 
   
   
       14 . The method of  claim 12 , wherein approving the loan request by the employee includes approving the loan request through a secure network. 
   
   
       15 . The method of  claim 12 , wherein deducting the at least one loan payment from the paycheck of the first employee includes deducting the at least one loan payment through an auto-deduction process. 
   
   
       16 . The method of  claim 12 , wherein transmitting the monetary value of the at least one loan payment to the lender via the predetermined money transferring system includes transmitting the loan payment through an Automated Clearing House. 
   
   
       17 . A loan program comprising:
 a loan processor;   a loan request system in communication with the loan processor and operable for an employee of an employer to request a loan;   an authentication system in communication with the loan processor to authenticate at least several underwriting aspects related to the requested loan;   a loan amount determination system in communication with the loan processor to determine a total amount of the loan, wherein the total amount of the loan includes a non-principle portion and a principle portion, wherein the non-principle portion is equatable to an interest rate that is not greater than a threshold annual percentage rate per annum;   a loan payment determination system in communication with the loan processor to determine a loan payment to be deducted over a number of paydays until the loan is paid-in-full;   a loan proceed distribution system in communication with the loan processor to provide a distribution of an amount of loan proceeds equivalent to the principle portion of the loan to the employee via a money transfer arrangement; and   a loan payment deduction system in communication with the loan processor for providing paycheck deduction instructions with respect to the employee to a payroll department controlled by the employer, wherein the paycheck deduction instructions include transferring an amount of money that is at least as much as the loan payment to a preferred lender.   
   
   
       18 . The loan program of  claim 17 , wherein the loan request system includes an interactive website portal accessible by the employee through a secure intranet of the employer. 
   
   
       19 . The loan program of  claim 17 , further comprising a secure database in communication with the loan processor, the secure database having employee information. 
   
   
       20 . The loan program of  claim 19 , wherein the employee information includes a password and a logon identifier assigned to the employee. 
   
   
       21 . The loan program of  claim 19 , wherein the employee information includes a loan history for the employee. 
   
   
       22 . The loan program of  claim 19 , wherein the employee information includes a payroll history for the employee. 
   
   
       23 . The loan program of  claim 17 , wherein the authentication system receives information to authenticate an underwriting parameter related to the requested loan. 
   
   
       24 . The loan program of  claim 19 , wherein the authentication system receives information from the secure database controlled by the employer. 
   
   
       25 . The loan program of  claim 17 , wherein the interest rate includes a loan fee. 
   
   
       26 . The loan program of  claim 17 , wherein the threshold annual percentage rate per annum is a not-to-exceed annual percentage rate established by the employer and a coordinator of the loan program. 
   
   
       27 . The loan program of  claim 26 , wherein the not-to-exceed annual percentage rate is in a range of 0% to about 36%. 
   
   
       28 . The loan program of  claim 17 , wherein the money transfer arrangement includes an arrangement for transferring the loan proceeds through an Automated Clearing House. 
   
   
       29 . A method for providing loans comprising:
 establishing a short term loan program for employees of an employer;   receiving a loan request from the employee before a regularly scheduled payday for the employee;   determining a loan amount available to the employee based on a threshold annual percentage rate set by the employer; and   providing the loan to the employee under a set of loan terms, wherein at least one loan term obligates the employee to a repayment plan for the loan over a number of payroll cycles.   
   
   
       30 . The method of  claim 29 , wherein receiving the loan request from the employee includes receiving the loan request over an intranet portal operated by the employer. 
   
   
       31 . The method of  claim 29 , wherein receiving the loan request from the employee includes receiving a user name and a password for identifying the employee. 
   
   
       32 . The method of  claim 29 , wherein determining the loan amount available to the employee includes authenticating the employee through a payroll system of the employer with the user name and the password. 
   
   
       33 . The method of  claim 29 , wherein determining the loan amount available to the employee includes determining a single amount of money available to the employee. 
   
   
       34 . The method of  claim 29 , wherein determining the loan amount available to the employee based on the threshold annual percentage rate includes combining all fees and interest associated with the loan to achieve the threshold annual percentage rate. 
   
   
       35 . The method of  claim 29 , wherein determining the loan amount available to the employee based on the threshold annual percentage rate includes reducing the annual percentage rate below a first amount if the employee submits the loan request before a first monthly loan request cut off date. 
   
   
       36 . The method of  claim 29 , wherein determining the loan amount available to the employee based on the threshold annual percentage rate includes establishing the annual percentage rate of the loan to be below a contracted annual percentage rate set by the employer. 
   
   
       37 . The method of  claim 29 , wherein determining the loan amount available to the employee based on the threshold annual percentage rate includes establishing the annual percentage rate of the loan to be below an annual percentage rate set by law. 
   
   
       38 . The method of  claim 29 , wherein providing the loan to the employee under the repayment plan includes providing the loan to the employee under an auto-deduction repayment plan that is integrated with a payroll system from which the employee is regularly paid.