Offshore Lending

Offshore lenders have servers and business operations outside of the U.S. If you did not know an internet “cash lender” was an offshore operation, you would not be able to discern this easily from the website – unless your web browser has an application to indicate the location (IP address) of the lender’s server. Bermuda is a popular server location.

If an applicant reads a lender’s online disclosure statement carefully, the lender’s business location may be determined from the “jurisdiction” provision. It should be noted that some of the offshore websites examined for this research provide generally comparable disclosure to state-licensed lenders in the same online marketplace.

  • Offshore lenders routinely disclose that their loans are not available in certain States.
  •  The following disclosures are representative of the offshore lenders examined for this research:
    • The loan process originates with an online application (which also can be completed by phone); applications require the following information: 
      • Name (as it appears on a Social Security card) and street address 
      • Date of birth 
      • Phone and e-mail address 
      • Source of income and whether the applicant owns or rents 
      • Driver’s license number (or state ID number)
      • Banking information
      • Loan amounts range from $100 to $1,500
      • The basic loan term is 14 days, even though loans can have longer terms

With respect to offshore lenders, the following information applies to a major lender:

  • Loan amounts range from $100 to $1,500 for first-time borrowers. The limit for “eligible” repeat customers (those with a good repayment record on previous loans with the lender) is $2,500. 
  • The minimum loan term is 14 days; the maximum term is 31 days. Some loans may be extended up to 3 times without a penalty fee; borrowers simply continue paying the loan’s APR. However, after 3 extensions, a borrower is subject to a minimum payment toward principal until the loan is repaid. 
  • First-time borrowers are eligible for a 25% discount on the base APR of 485%, which reduces the APR on an initial loan to 363%. All other loans are subject to the full 485% APR, regardless of loan amount or loan term. 
  • The total fee on a $100 loan to be repaid in 14 days equals $13.96 for a first-time borrower (at the discounted APR of 363%) and $18.62 for a repeat borrower (at the base APR of 485%).
  • A borrower who repays a loan “early” must pay at least the 14-day fee on the loan, regardless of the loan’s term.