Figures from the New York Fed are balances outstanding, not sale prices. Bands cited from DebtMarket’s pricing study are conversation ranges, not offers. This note is education for operating companies and creditors. It is not legal advice.
Payday and other small-dollar charge-offs are their own product. The balances are small, the contracts are short, and the originator is often a lender the buyer has to identify by legal name. A file that arrives as “short-term loans, mixed” can be sampled only after it is split by originator and by product. This note is about buying the paper. It is not advice to a consumer, and it is not a collection script.
The columns that have to be filled
| Column | What the buyer does with it |
|---|---|
| Originator | The legal entity that extended the credit |
| Product | Single-payment payday, installment, or another small-dollar contract |
| Amount financed and finance charge | Kept in separate columns from unpaid principal at cut-off |
| Origination date and charge-off date | The life of a short contract is visible only if both dates are present |
| State of the consumer at origination | Matched to the buyer’s box |
| Contract image | Sampled. A flag of yes is checked against the image |
Unpaid principal at the cut-off is the denominator. Finance charges and fees that were added later belong in their own columns. A single balance that folds them together will fail the sample on the rows you open.
Work cost sits on a small balance
A letter, a skip, and a dispute take a larger share of a few-hundred-dollar balance than of a bankcard account of several thousand dollars. Buyers discuss the percent of face with that ratio in view. There is no credit-card band to borrow. The 3 to 8 percent range in the pricing study is a bankcard conversation range. Small-dollar paper is priced as its own product after the sample.
Rules around the product
Short-term and small-dollar credit is regulated by state law and, for some products, by Consumer Financial Protection Bureau rules that have spent years in litigation. The bid does not assume a national rule of thumb. The buyer confirms that the product is one it is prepared to hold, in the states named on the tape, and that the contract image matches the columns. Where the Fair Debt Collection Practices Act applies, it applies to consumer debt as defined in 15 U.S.C. § 1692a(5), and the collector analysis is the one on FDCPA and Regulation F. Commercial receivables do not belong in this file.
Sellers with a single originator and a single product can submit the snapshot with the count, the unpaid principal, the window, and a media percent. The field list is the data tape.
A sample of twenty-five small loans
A lender offers 900 single-payment accounts, $310,000 unpaid principal, one originator, contracts flagged on 70 percent. Open 25 images. Nineteen show the originator, the amount financed, and a finance charge in its own figure. Six are payment receipts with no contract. The bid uses the nineteen and drops the six, and it says so with the dollar amount of the six. The state column is then matched to the buyer’s box. Rows in a state the buyer will not take come out before price, the same way they do on a card file.
Keep the product code tight. If 200 of the 900 rows are installment contracts from a second originator, split them into a second tape. One asking percent across both originators hides the contract test. Sellers who can split the file can submit each snapshot on its own. Buyers who do not want this product should say so in the box they give creditors, which is the list described in a creditor’s buyer panel.