Small Loans. We originate small loans ranging from $500 to $2,500 through our
branches, which we refer to as our branch small loans, and through our convenience
check program, which we refer to as our convenience checks. Our small loans
are standardized to reduce documentation and related processing costs and to
comply with federal and state lending laws. They are payable in fixed rate,
fully amortizing equal monthly installments with terms of up to 36 months, and
are repayable at any time without penalty. The interest rates, fees and other
charges, maximum principal amounts, and maturities for our small loans vary
from state to state, depending upon relevant laws and regulations.
Branch Small Loans. Our branch small loans are made to customers who visit one
of our branches and complete a standardized credit application. Customers may
also complete and submit a loan application by phone or on our consumer website
before closing the loan in one of our branches. We require our customers to
submit a list of non-essential household goods and pledge these goods as collateral.
We do not perfect our security interests by filing UCC financing statements
with respect to these goods and instead typically collect a non-recording insurance
fee and obtain non-recording insurance.
Convenience Checks. Our convenience check loans are originated through direct
mail campaigns to pre-screened individuals. These campaigns are often timed
to coincide with seasonal demand for loans to finance vacations, back-to-school
needs, and holiday spending. We also launch convenience check campaigns in conjunction
with opening new branches to help build an initial customer base. Customers
can cash or deposit convenience checks at their convenience, thereby agreeing
to the terms of the loan as prominently set forth on the check and accompanying
disclosures. When a customer enters into a loan by cashing or depositing the
convenience check, our personnel gather additional information on the borrower
to assist us in servicing the loan and offering other products to meet the customer’s
financing needs.
Credit Life Insurance, Credit Accident and Health Insurance, and Involuntary
Unemployment Insurance. We market and sell optional credit life insurance, credit
accident and health insurance, and involuntary unemployment insurance in connection
with our loans in selected markets. Credit life insurance provides for the payment
in full of the borrower’s credit obligation to the lender in the event
of the borrower’s death. Credit accident and health insurance provides
for the repayment of certain loan installments to the lender that come due during
an insured’s period of income interruption resulting from disability from
illness or injury. Involuntary unemployment insurance provides for repayment
of certain loan installments in the event the borrower is no longer employed
as the result of a qualifying event, such as a layoff or reduction in workforce.
All customers purchasing these types of insurance from us sign a statement affirming
that they understand that their purchase of insurance is not a condition of
our granting the loan. In addition, customers may cancel purchased insurance
within 30 days of the date of purchase and receive a full refund of the insurance
premium. Customers are paid a partial refund in the event of an early payoff
or loan refinancing.
Property Insurance. We also require that our customers provide proof of acceptable
insurance for any personal property securing a loan. Customers can provide proof
of such insurance purchased from a third party (such as homeowners or renters
insurance) or can purchase the property insurance that we offer. The Company
also collects a state-allowed fee for collateral protection and purchases non-recording
insurance in lieu of recording and perfecting the Company’s security interest
in the assets pledged on certain loans. In addition to offering property insurance
on the household goods used as collateral for our loan products, we also offer,
in select markets, vehicle single interest insurance that provides coverage
on automobiles used as collateral on small and large loans. This affords the
borrower flexibility with regards to the requirement to maintain full coverage
on the vehicle while also protecting the collateral used to secure the loan.
Reinsurance. The optional credit insurance and property insurance risks are
ceded by the non-affiliated insurance company that issued the policies to RMC
Reinsurance, a wholly-owned subsidiary of Regional Management Corp.
Collateral Protection Collision Insurance. Before we originate an automobile
loan, we require the borrower to provide proof of acceptable liability and collision
insurance on the vehicle securing the loan. While we do not offer automobile
insurance to our customers, we will obtain collateral protection collision insurance
(“CPI”) on behalf of customers who permit their other insurance
coverage to lapse. If we obtain CPI for a vehicle, the customer has the opportunity
to provide proof of insurance to cancel the CPI and receive a refund of all
unearned premiums.