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Can You Use Your Car to Get a Loan?

Dozens of options exist for consumers looking to borrow money, but some loans are much harder to access than others. The best and least expensive ways of borrowing money generally require the borrower to have a good credit history, and many people aren’t in that situation.

That’s where things like payday loans and auto title loans come in, some people say — that’s a controversial viewpoint, which I’ll explain later.

First, it’s important to go over the details of what auto title loans are.

What Is an Auto Title Loan?

In 21 states, if you own a car, you can probably get an auto title loan. (There are some auto title lenders who allow consumers to borrow against a vehicle if they have a certain percentage of equity, but those are uncommon.) You take your vehicle to an auto title lender — generally a storefront business — where the lender determines the value of the vehicle and offers you a loan for a certain percentage of that car’s value.

You give the lender the title as collateral for the loan, giving the lender the ability to repossess your car if you do not repay the loan. The average loan is $951 and is due in full, plus fees and interest, in 30 days, according to a report from the Center for Responsible Lending. Fees generally run $25 per $100 borrowed, so that’s $237.75 for the average $951 loan (plus interest).

Interest rates average 25% per month, or 300% APR. Eighteen of the 21 states with auto title lenders allow triple-digit APRs (Arizona, New Hampshire and Georgia do not). Those 21 states are Alabama, Arizona, California, Delaware, Georgia, Kansas, Louisiana, Idaho, Illinois, Mississippi, Missouri, Nevada, New Hampshire, New Mexico, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia and Wisconsin.

Borrowers may refinance (for a fee) their loans at the end of their 30-day loan period if they cannot afford the balance.

That’s the gist of it. Theoretically, it’s a simple process: Bring your car to the store with your driver’s license, vehicle title, spare key and possibly a recent paycheck stub. The lender determines the car’s wholesale value, lends you a portion of that value in cash, and you make an appointment to return in 30 days to repay the loan.

In reality, the process gets much more complicated from there.

Why Auto Title Loans Are Controversial

Some people think auto title loans are a useful tool, while others condemn the practice as predatory lending.

Tony Petkovich, head of global trading at PCM Capital Management, invests in auto title lenders and thinks the products serve a purpose for people who can’t get other types of loans and don’t have credit cards. He sees it as a valuable option for business owners or consumers who find themselves in a pinch and have no other ways of getting cash they need as soon as possible.

“The bottom line is this if you’re short on money, … and somebody tells you, ‘Look we’re going to let you make the deal happen, but we’re going to charge you a 35% interest rate,’ the bottom line you’re going to look at the benefit to you — you’re not going to care how much it costs,” Petkovich said. He’s referring to a 35% monthly interest rate, by the way.

That’s the thing: If you’re taking out an auto title loan in an emergency, you will pay for it. Even if you make the balloon payment at the end of 30 days, you’re looking at paying hundreds of dollars in fees and interest, in addition to the principal balance.

This is where things get pretty ugly in auto title lending: Most people don’t repay the loan within 30 days, and the cost of that initial loan skyrockets. The average car title loan borrower renews the loan eight times, so for the $951 average loan, that’s an extra $1,904 in total renewal fees and $2,142 in interest. This average person pays $3,093 to borrow $951, according to the Center for Responsible Lending’s 2013 report on the industry. The report is based on state-level data and bankruptcy court proceedings involving auto title loans.

“The normal customer who gets a car title loan ends up trapped in that loan,” said Chris Kukla, senior vice president of the Center for Responsible Lending. He said the typical outcome from these loans negates arguments for their existence.

“That’s always the comment they make is, ‘Where else are they going to go?’” Kukla said, referencing business owners and industry advocates. “It doesn’t justify a problem that traps people in debt. Is the credit they’re getting doing them any favors? Is it really helping them, or is it just creating another financial emergency? And what’s clear is car title loans create a financial emergency.”

If these sound a lot like the problems people highlight with payday lending, that’s because they are. Using the car as collateral sets these products apart (payday loans are also available in all 50 states). If you’re taking out an auto title loan, chances are your credit is already in bad shape, and defaulting on one of these loans will trash it further. (You can get your credit scores for free every month on Credit.com to see where you stand.) On top of that, you will lose your car and the lender will sell it. Should the proceeds of that sale not cover the amount you owe in principal, interest and fees, the lender could send a debt collector after you — that’s another hit to your battered credit. Add that to the fact that you’ve lost your car and quite possibly your only way of getting to work, the worst-case scenario of taking out an auto title loan is pretty horrifying.

Auto Title Loan Alternatives

There are many more reasons why you should not get an auto title loan than why you should. Still, that doesn’t necessarily help someone who desperately needs money and sees an auto title loan as the only viable option.

“Don’t. Just don’t,” Kukla said he would say to anyone considering an auto title loan. “There are going to be other options available, and some of them may not be as easy to do, but these lenders are going to try and promise that this is going to be a short-term loan, but everything we know is people walk in the door and end up trapped in worse situations. … Try every other option you have. Even if it (an auto title loan) is an option, it’s an option that’s going to destroy you. It’s not going to be a help.”

If you own your car, Kukla said you can try your local credit union for a product that is similar to an auto title loan in name only: Based on the value of your car, the credit union may lend you a percentage of that car’s value, but it’s more like taking out a new auto loan on your car, with installment payments and a lower interest rate.

More from Credit.com
What to Do If You Can’t Make Your Car PaymentsCan You Get a Car Loan With Bad Credit?The Lifetime Cost of Debt CalculatorLoansFinance

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Can You Use Your Car to Get a Loan?

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Dear John: Cash in pension after losing job?

Dear John: I am 58 years old and currently unemployed. I have been in the banking industry for the past 34 years. I lost my job in June.

While I have savings to last me through next July, I have debt that I would like to pay off. I am considering cashing in one of my pension plans with my previous employer. I know cashing in a pension is probably never a good idea unless you roll over, but I would like your advice on my situation.

I have a conventional pension plan worth $185,000 I am looking to cash in. I also have 401(k) plans that I will not touch totaling about $225,000.

Cashing in the $185,000 will allow me to pay off my mortgage, credit-card debt and private loans totaling about $60,000.

I am also saddled with student loans for my two daughters of about $40,000. Interest on the credit cards run about 9 percent and the mortgage is at 5 percent but only has 2 ½ years left to pay off. The private loan is no-interest, but the student debt is costing me 8 percent.

Payments for this debt total about $2,600 per month. These payments are eating up my savings, but I will still last until July.

Employment prospects do not look good. If I can pay off, I would be free of those payments and might possibly find a lower-paying job and not have to worry about the debt.

My salary in my banking career was in the mid-six figures — good money.

Even after cashing in, I would still have my 401(k) and my Social Security to live on when I reach 62. My wife will have hers at 62 as well.

She only has a small pension due her, which will pay about $150 per month. All of these incomes add up to about $4,700 per month once I formally retire. With no debt, I think am OK.

If I did not cash in the $185,000, that would give me another $1,500 per month. I do not believe I will have to pay any penalty to cash in as I was over 55 when I became unemployed.

I do not want to cash everything in and just live on Social Security alone, or work for the rest of my life. I’d like to find a job I can live with, even at a greatly reduced salary, and not have to worry about bills.

Please let me know your thoughts on my issue. Thanks for your time. Mike

Dear Mike: Ah, the Golden Years! Aren’t they great?

I asked Scott Brewster, a certified financial planner in Brooklyn, to opine on your situation.

“Sorry to hear,” says Brewster, who is a member of the Financial Planning Association. “It must be very stressful after 34 years in the banking industry to lose one’s job making mid-six figures and struggle to find another job.”

Brewster doesn’t think that cashing in your pension early is the solution you need.

“You probably are correct that since you were separated from service after age 55 you might not be hit with the 10 percent penalty on withdrawing your pension money,” he says. If the funds were in an Individual Retirement Account, the early withdrawal penalty would apply until the age of 59 ¹/? .

But Brewster warns that “you will get taxed on the withdrawal, and $185,000 cashed in might only leave you with $110,000 after taxes. Not only that, you would be reducing your retirement nest egg by close to 50 percent.”

He says the real issue is that you are struggling to find work and even with your loans paid off, you are going from making a mid-six-figure income to just looking to get by in a few years on Social Security and a 401(k) that is about equal to what you made in one year while working.

“My action plan for you,” says Brewster, “would be to make getting another job your No. 1 priority. Working on finding your next job eight hours a day is not enough. You need to put in overtime securing your next job so that you not only avoid cashing in your pension but are in a position to keep saving more for retirement and pay off your debts from your income.”

Mike, (this is John speaking) you and I know that the job market stinks and that you are at an age and salary level when employers think they can get a better deal with someone younger.

So you need to make prospective employers know that you don’t have what they call “salary demands.” You have, instead, salary suggestions. And that you are very flexible.

And you need to connect anyone from your previous job who might be able to help you find work. Beg them if that’s what it takes.

“If you work long and hard all the way until next July when your savings will run out, and you do not find a new job, then you can — without guilt — pull money from your pension, because then you have tried everything you possibly could to not do so,” says Brewster.

And even then, Brewster says, he would only pull out what you need to make the minimum loan payments and keep working at the job hunt. “And yes, it is a hunt. You have killed it for a long time, and you need to go back out and continue to kill it,” he says.

“With 34 years of experience under your belt, don’t sell yourself short. This period of unemployment will pass, and if you throw all your energy into getting to the other side, you will be stronger for it and will have your pension still intact along with your 401(k),” Brewster says.

Both he and I wish you the best of luck. Stay optimistic and smile when you interview. Prospective employers like to hire happy people.

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Christmas conmen target hard-up families by setting up BOGUS payday loan companies

Hard-pressed families ­desperate for Christmas cash are being cruelly ripped off by ­bogus payday loan companies.

Victims are duped into handing over an upfront fee of up to £60 to process applications for online loans which never materialise.

They are then redirected to the web page of an authorised lending site – but the owners of the legal sites turn out to be in the dark about the trickery.

It is also believed unscrupulous sites trick “borrowers” into handing over bank details and other personal information which can be exploited or sold.

The Sunday People can reveal the crooks use slick online adverts, complete with pictures of smiling Santas, snowmen and presents, to lure the unwary with ­offers of short-term loans, offered without checks and ­supposedly paid out the same day.

They promise festive fun on the cheap with tempting slogans like: “Spread the cost of Christmas – how much would you like to borrow?”

Dodgy: The sites are designed to dupe the unsuspecting and desperate

In reality many of these websites are part of a shameful world-wide scam which tries to fleece people who are often already struggling for cash.

In one con, police had to be called to a genuine business address which had been used as a front for a rip-off loan website – after angry victims turned up demanding their “admin fee” back and asking why loans had never been paid out.

Debt experts believe 1.4 million Britons will take out payday loans to cope with the cost of Christmas.

Even when the loans are for real, interest rates can be an ­extortionate 3,000% a year.

Lending industry bosses last night urged regulators the Financial Conduct Authority to investigate what it called a “plague” of dodgy websites that promise easy cash with no checks.

Russell Hamblin-Boone, of the Consumer Finance Association, warned: “A plethora of risky Christmas-themed sites have sprung up to trap unsuspecting ­borrowers with promises of loans that offer no protection.

“The result is that people have their money stolen by illegal lenders.”

A few clicks on Google brings up a string of genuine-looking sites advertising Christmas loans at sky-high rates.

PaydayXmas promises “quick cash” with an APR of 3,257% and asks: “How much do you need?”

The website, registered in Douglas, Isle of Man, claims to be a trading brand of an authorised lending broker licensed by the Financial Conduct Authority.

An investigator sent to the broker’s registered address at an ­accountancy office in Wanstead, East London, was told police had been called to control people ­angrily complaining that they had not received loans.

The accountancy firm said the scam had been traced to an ­address in Birmingham, where the money had been banked and then sent to India.

Xmas Loans for People with Bad Credit

At another lending website, Christmas Loans Poor Credit, potential customers are offered payouts ranging from £100 to £1,000 and told: “Apply now and you can enjoy your festive season with full joy.”

The site adds: “Make Christmas more amusing with instant Christmas loans.” But borrowing £225 over 28 days will cost a total of £292.50, an equivalent APR of 2,857%.

People who apply are directed to a page for a genuine credit broker with a registered address in Southend-on-Sea, Essex.

Another site called Spread the Cost of Christmas asks: “How much would you like to borrow?”

Applicants are directed to another site called Little Loans, an authorised credit broker whose parent company Digitonomy is based in Chester.

Digitonomy director Daniel Ashton insisted his company was NOT ­involved in Christmas payday loans.

He said: “Our products are typically loans of around £2,000 over two years.”

His co-director Tim Moss added: “In terms of people borrowing to pay for Christmas, it is not something we would ever recommend.”

A “Need 12 Month Loans” site offers Christmas loans with a 1,990 APR, ­visitors are told: “Have a blast with your beloved ones this Christmas.” Elsewhere on the site, complete with an image of Santa and a Christmas tree, it says: “It is the season of joy.

“If you want to make this Christmas the most celebrated one and have funds in your pockets for the same, then just think of applying for Xmas payday loans. Have a blessed time with your loved ones without having to worry about your financial woes.”

Get Christmas Loans Today

The site is linked to another Financial Conduct Authority-licensed firm whose registered business address is a shop in Finchley, North London.

Another website, Get Christmas Loans, suggests it is linked to an ­authorised loan broker called Cash Lion, which is a trading name of ­legitimate UK company Loan Machine.

Loan Machine director Chris Burgoyne revealed that the Christmas Loans website was nothing to do with his company, based in Gorleston, Great Yarmouth, Norfolk. He said: “We don’t own that site. If they have got a link to us, they shouldn’t have and I will investigate it instantly. It could be a scam.

“We’ve had problems for years with people impersonating us and charging us fees and charging ­customer’s fees.”

Mr Burgoyne said his firm had been targeted so often a ­warning had been posted on the Financial Conduct Authority website, saying fraudsters commonly tried to use their registered name.He added: “We have been targeted for years, hence we got the FCA and the police involved.

“At the end of the day it is a waste of their time linking to us as we are not going to pay them any money. We try and do everything above board.

“We have not got any Christmas sites at all. If people are using our name, then it is very immoral.”

Industry leaders believe that ­unofficial websites, with promises of no credit checks and instant cash, are all in breach of industry rules.

Rudolph’s Readies

The Consumer Finance Association, which represents major short term lenders, has reported a string of Christmas loan websites to the regulator.

Russell Hamblin-Boone, chief executive of the Consumer Finance Association, said Google had taken down some of the sites.

But he added: “As quickly as you get them taken down others crop up under different names. They are duping people. Our advice is simple. Never give your details to a website that you don’t know to trust.”

Debt charities say no one should ever pass over details to sites unless they are certain they are genuine.

But they say regulators need to do more to crack down on some practices in the high cost sector.

Debt-stricken families are advised to seek help from credit unions – regulated co-operatives whose members can borrow from pooled deposits at rates of around 12% a year.

An estimated 1.8 million people use payday lenders, typically taking out six loans a year, at £260 a time.

The Money Advice Trust said: “If you’re struggling to cope with Christmas costs, the best thing you can do is seek free advice from a charity-run service like National Debtline as soon as possible.”

National Debtline can be ­contacted on 080 8808 4000 or www.nationaldebtline.org.uk

And new legal lenders are exploiting Christmas desperation

Alarm has also been raised about new legal payday lenders exploiting ­families desperate to afford Christmas.

The firms, set up because established lenders are scaling back before a New Year crackdown, charge huge interest.

“The sole purpose of the sites is to entice people into applying for credit they may not be able to afford,” said the Consumer Finance Association’s Russell Hamblin-Boone.

“There are no credit checks and no health warning about the risks. All this is in breach of the regulations.”

Jane Tully, of the Money Advice Trust ­charity, said: “Lenders and credit brokers should not be trying to exploit the festive season in a cynical attempt to market loans and several websites have been reported to regulators.”

Under Financial Conduct Authority rules from January 2, lenders ­cannot charge more than 0.8% a day in interest and fees and also cannot charge more than £15 should ­borrowers default.

The FCA said it is aware of the new Christmas loan websites.

Have you been the victim of a pay day loan scam? Please get in touch and email feedback@people.co.uk

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12 OYS: Payday loan users caught in vicious quick-cash, high interest cycle


Related Links
Americans for Financial Reform report

News 12 at 6 o’clock / Friday, Dec. 19, 2014

AUGUSTA, Ga. (WRDW) — Some folks rely on payday and title loans to get from one paycheck to the next.

For Christene McCullough, taking out a title loan has been one big nightmare.

“Some nights I lay there and I cry,” said McCullough. “It’s gotten to the point where it’s hard to pay it (loan) because bus transfers are like $50 a month.”

In June, after her SUV broke down, McCullough borrowed $1,500 from TitleMax to get the vehicle fixed. It is still in the shop.

So, now she borrows a friends car which helps. But being on disability and raising two children, she does not have the money to make her $220 a month payment to TitleMax, because she said the interest is too high.

“You’re paying like $189 in interest and whatever else you pay over, that’s what goes to the loan,” McCullough said.

“I will never do that again,” Darrell Mayfield said.

He took out a $400 payday loan during Christmas several years ago.

“It was a necessity. I needed the money,” McCullough said.

But he too ran into some hardship.

“I called and let them know that I was going to give them the money the next day,” McCullough said.

Which he said led to dozens of harassing phone calls and even worse.

“Once you miss a payment, the interest level just skyrockets,” McCullough said. To as much as 500 percent.

According to a new report by non profit Americans for Reform, the “debt trap is an essential element of the quick-fix lending industry, and with its “extremely high fees, many people end up paying far more in loan charges than they originally borrowed; and because of strong arm collection tactics, payments to these predatory lenders often take priority over rent, utilities and other necessities.”

“The ability to pay is difficult so they get caught in that thing of trying to pay them back,” Mayfield said.

The industry has spent millions on lobbying and campaign contributions to 50 members of congress, in what AFR calls an effort to “line the pockets of powerful Washington politicians.”

Meanwhile McCullough says she has learned an expensive lesson. “If you are trying to get a loan from a loan place, don’t do it, said McCullough.

We called and or emailed TitleMax, Advance America and several other title pawn and payday lenders, but have not heard back from any of them yet.

Americans for Financial Reform report.


Have information or an opinion about this story? Click here to contact the newsroom.


Copyright WRDW-TV News 12. All rights reserved. This material may not be republished without express written permission.

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No fresh loans to SpiceJet, says State Bank of India

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BBB Warns of the Pitfalls of Payday Loans

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cash loan – Yahoo News Search Results:

Some payday loans carry interest rates as much as 400% to 700% and may not allow early pay offs.

Southfield, MI (PRWEB) December 19, 2014

Consumers who have financial trouble during the holidays may be enticed to bridge the gap between paychecks by obtaining a payday loan. Better Business Bureau (BBB) Serving Eastern Michigan is warning consumers to be cautious, as these loans typically have very high fees and interest rates as well as questionable sales and collection tactics that confuse and intimidate borrowers.

Payday loans are loans of short duration, usually two weeks, and can be obtained from a physical payday loan store or on the internet. Better Business Bureau receives hundreds of complaints against payday loan companies alleging threats of arrest and notifications to employers about their debt. Complaints also state that consumers who apply for loans online, may not see the full disclosure of interest rates or fees until after they have signed the documents and that there are unauthorized withdrawals from their bank accounts.

Typically, payday lenders do not perform a credit check but ask borrowers to write them a post-dated check for the amount they borrow plus a borrowing and account set-up fee. The lenders will then deposit the check after the borrower’s payday if they have not already paid off the loan. If the borrower’s bank account cannot cover the amount of the loan, they will then owe the original loan plus added interest and they may also incur overdraft fees from their bank. Borrowers can chose to pay more fees to renew the loan if they know they cannot pay it off in time. This practice creates a cycle of consumer refinancing and continuous debt.

Payday loans are regulated in Michigan in most cases. For example, a payday lender can only have one outstanding payday loan per customer for a loan amount of up to $600. A customer may take out a second loan with a different payday lender, and can only have two outstanding payday loans at any given time. The payday lender may charge up to 15% on the first $100, 14% on the second $100, 13% on the third $100, 12% on the fourth $100, and 11% on the fifth and sixth $100.

Consumers should be aware that some payday loan companies, such as those operated by Native American tribes, may have tribal sovereign immunity from laws that govern other lenders. These loans often carry interest rates as much as 400% to 700% and may not allow early pay offs, resulting in a cycle of perpetual debt for the borrower. The Consumer Financial Protection Bureau recently released a report that analyzed payday lending and found that four out of five payday loans are rolled over or renewed within 14 days.

Alternatives to Payday Loans

Before you decide to take out a payday loan, consider some alternatives:

1. Consider a small loan from your credit union or a small loan company. Some banks may offer short-term loans for small amounts at competitive rates. A local community-based organization may make small business loans to people. A cash advance on a credit card also may be possible, but it may have a higher interest rate than other sources of funds: find out the terms before you decide. In any case, shop first and compare all available offers.

2. Shop for the credit offer with the lowest cost. Compare the APR and the finance charge, which includes loan fees, interest and other credit costs. You are looking for the lowest APR. Military personnel have special protections against high fees or rates, and all consumers in some states and the District of Columbia have some protections dealing with limits on rates. Other credit offers may come with lower rates and costs.

3. Contact your creditors or loan servicer as quickly as possible if you are having trouble with your payments, and ask for more time. Many may be willing to work with consumers who they believe are acting in good faith. They may offer an extension on your bills; make sure to find out what the charges would be for that service — a late charge, an additional finance charge, or a higher interest rate.

4. Contact your local consumer credit counseling service if you need help working out a debt repayment plan with creditors or developing a budget. Non-profit groups in every state offer credit guidance to consumers for no or low cost. You may want to check with your employer, credit union, or housing authority for no- or low-cost credit counseling programs, too.

5. Make a realistic budget, including your monthly and daily expenditures, and plan, plan, plan. Try to avoid unnecessary purchases: the costs of small, every-day items like a cup of coffee add up. At the same time, try to build some savings: small deposits do help. A savings plan — however modest — can help you avoid borrowing for emergencies. Saving the fee on a $300 payday loan for six months, for example, can help you create a buffer against financial emergencies.

6. Find out if you have — or if your bank will offer you — overdraft protection on your checking account. If you are using most or all the funds in your account regularly and you make a mistake in your account records, overdraft protection can help protect you from further credit problems. Find out the terms of the overdraft protection available to you — both what it costs and what it covers. Some banks offer “bounce protection,” which may cover individual overdrafts from checks or electronic withdrawals, generally for a fee. It can be costly, and may not guarantee that the bank automatically will pay the overdraft.

The bottom line on payday loans: Try to find an alternative. If you must use one, try to limit the amount. Borrow only as much as you can afford to pay with your next paycheck — and still have enough to make it to next payday.

Collection activities are subject to the federal Fair Debt Collection Practices Act. Therefore, if you have questions regarding debt collection laws please contact the Federal Trade Commission at 1-877-FTC HELP, or online at http://www.ftc.gov. Debt collectors cannot state or imply that failure to pay a debt is a crime.


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Discover Financial Services (DFS): New Analyst Report from Zacks Equity Research – Zacks Equity Research Report

From
cash loan – Yahoo News Search Results:

Summary:

Discover Financial’s strength lies in its strong inorganic growth story and solid cash position that also enables efficient capital deployment. However, weakness prevailing in the Payment Services segment and escalating expenses raise caution. Its third-quarter earnings surpassed the Zacks Consensus Estimate on lower share count and card loan growth. Moreover, the company’s quality services keeps it cushioned against high customer attrition. An extensive student loan portfolio, global expansions, prudent capital management and increased card sales position it well for long-term growth. Additionally, implementation of the core banking platform supports all the deposit products, thus accelerating customer service. However, competition, lawsuit damages and regulatory challenges remain headwinds. We maintain our Neutral recommendation on the stock.

Overview:

Founded in 1986 and based in Riverwoods, IL, Discover Financial Services is a direct banking and payment services company in the United States. The company offers credit cards, personal, student and home loans as well as deposit products. In Mar 2009, Discover Financial became a bank holding company under the Bank Holding Company Act of 1956 and a financial holding company under the Gramm-Leach-Bliley Act in connection with its participation in the U.S. Treasury’s Capital Purchase Program.

Discover Financial offers its products and services with acceptance in more than 185 countries and territories. The company operates through three networks:

The Discover Network Discover Financial’s credit card payment network.

The PULSE network Discover Financial’s ATM, debit and electronic funds transfer network.

Diners Club International Discover Financial’s global payment network.

Discover Financial manages its business activities in two segments:

The Direct Banking segment (accounted for 96% of total revenue in 2013), formerly referred to as the U.S. Card segment, includes Discover card-branded credit cards issued to individuals and small businesses in the Discover Network. The segment also offers personal loans, student loans, home loans, prepaid cards and other consumer lending and deposit products.

The Payment Services segment (4%), formerly referred to as the Third-Party Payments segment, includes PULSE, Diners Club and its network partners business (previously referred to as the third-party issuing business), which includes credit, debit and prepaid cards issued by the third parties on the Discover Network.

Discover Financial continues to grow inorganically through acquisitions. In Dec 2010, the company acquired The Student Loan Corporation (SLC) in a merger transaction for $600 million and received a purchase price closing adjustment in a cash payment of approximately $234 million from Citibank, the 80% owner of SLC before the merger, resulting in a net cash outlay of approximately $366 million for the acquisition of SLC. In the transaction, Discover Financial acquired SLC’s ongoing private student loan business and approximately $4.2 billion of private student loans and other assets, along with approximately $3.4 billion of SLC’s existing asset-backed securitization debt funding and other liabilities. It also acquired the loans and other assets at an 8.5% discount. SLC is now a wholly owned subsidiary of Discover Bank.

In June 2012, Discover Financial announced the completion of the purchase of almost all operating and related assets of Tree.com Inc.’s subsidiary Home Loan Center. The company has already paid $49 million for the deal, including payments made prior to the closing. Another $10 million was paid on the first anniversary of the closing date, that is, June 2013. Home Loan Center originates and processes residential mortgage loans across all 50 U.S. states as well as the District of Columbia.

Following the acquisition of Home Loan Center, Discover Financial expanded its product portfolio to include residential mortgage with the launch of Discover Home Loans in June 2012. The company now offers commercial and Federal Housing Administration loans with both variable and fixed rates.

In Dec 2012, Discover Financial’s board approved a change in its fiscal year to Jan 1 Dec 31, effective from Jan 2013. Earlier, the company’s fiscal year ended on Nov 30. Due to the change, Dec 2012 was a transition period and was reported separately with the financial results for the first quarter of 2013 and full-year 2013.

Discover Financial Services (DFS): Read the Full Research Report

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Cooperative Baptists urge Congress to support payday loan reform …

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Fitch Affirms SLM Student Loan Trust 2003-11 Notes; Outlook Stable

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Fitch Affirms SLC Student Loan Trust 2005-2 Senior and Subordinate Notes

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