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A payday loan or cash advance is a small loan, unsecured loan, or short-term loan that comes due on the borrower’s next payday. A payday loan or cash advance is intended to cover small, unexpected, financial situations from payday to payday to avoid expensive NSF (non sufficient funds) fees, presentment charges, late bill fees, and other more costly short-term credit options such as a cash advance on a credit card. Our online payday loan or cash advance application is fast and easy. You need to have a personal bank or credit union account and be employed in one of our service areas. (Ontario, Alberta or British Columbia) Our virtual payday loan application will provide you with instant pre-approval for a cash advance or payday loan and then your application will be sent to our friendly staff to verify the information you provided is correct. Once the payday loan application is approved the cash advance or payday loan funds will be deposited into your bank account. You will find full disclosures on all of our affiliate’s websites, as well when you apply for a payday loan or cash advance with us you will receive a copy of your payday loan or cash advance application along with a copy of the privacy policy, refund policy, and the terms and conditions of our payday loan and cash advance services, to insure that you are fully aware of all of our payday loan and cash advance policies and procedures.

Study on Payday Industry Criticism

A recent study conducted by The Statistical Assessment Service (STATS) within the George Mason University, has reviewed criticism relating to the practices of payday loan companies.

They have found that media coverage associated with payday lending services is an indication of a lack of complete understanding of the rates charged for borrowing and other related information.

"Recent coverage of payday loans illustrates a broader tendency by the media to deal with social problems by fixating on a 'villain' instead of examining the complex interaction of actors, social problems and trends. In this case, these include such factors as a lack of financial education and the ability to manage household spending and debt, as well as the broader social consequences of a political culture and economic system that emphasize individual opportunity and competition over equality and community.

Every industry contains malefactors who deserve to be exposed. But every industry is also based on incentives that need to be explained, in order to fully understand the relationship between business and consumers. It is here that the media are often sadly lacking, as the case of payday loans illustrates."

Source:
No author. (2008). Predatory reporting? STATS study questions media criticism of 'predatory' payday loans in The Wall Street Journal Digital Network.
http://www.marketwatch.com/news/story/predatory-reporting-stats-study-questions/story.aspx?guid=%7B84805994-049E-40EA-AF78-B3DD092D33DC%7D&dist=hppr
To view the entire study: http://www.stats.org/stories/2008/how_bad_payday_loans_july18_08.html

Ohio Payday Lending Store Check Into Cash Closing

A hard law was passed in the state of Ohio, causing many payday loan stores to close their doors. Check Into Cash was one major company that has announced their decision to close their stores in the Ohio locations.

The bill passed by the Ohio Legislature imposes an APR cap of 28% on payday loans.

"It's hard to believe that legislators turned their backs on thousands of constituents and passed this law that will put 6,000 people out of work," said the president of Check Into Cash Steve Scoggins, "Not only that, but thousands more will be denied access to this short-term credit option."

The closure of the stores will result in 93 centers being closed down, with 220 employees being laid off and retail space being abandoned.

Source:
http://www.thenews-messenger.com/apps/pbcs.dll/article?AID=/20080519/UPDATES01/80519011

Leaders advised to pursue finance problems

A problem that has been identified by Clinton focuses on the lack of financial knowledge situated among the lower to moderate class income individuals. This is in reference to an increase in popularity of the payday loan and check cashing industry.

"There are more check-cashing, payday loans and pawn shops in the United States than there are McDonald's and Starbucks worldwide," he said.

He said "estimates suggest 28 million Americans don't have a bank account and spend about $1,000 a year cashing pay checks. If that money were invested in retirement savings about $360,000 could be incurred in interest."

Clinton has urged local governors to implement a program to educate consumers on payday loan use and about the use of banks.

Source:
Gibson, Ginger. (2008). Clinter urges governors to close the gap.
http://www.delawareonline.com/apps/pbcs.dll/article?AID=/20080713/NEWS02/807130354

New payday loan laws in the U.S.

The following is an excerpt from the article "Hundreds of laws going into effect" in the dailypress.com

The new law limits borrowers to a single outstanding loan at any time and gives them twice as long to repay the money - double their pay cycle. Lockout provisions and cooling-off periods are meant to discourage repeat borrowing. A database will track individuals' borrowing activity.

Critics had wanted a tougher law, especially when it comes to fees that the industry can charge. Industry representatives have complained the legislation is complex and will force some payday lenders out of business.

Source:
Lessig, Hugh. (2008). Hundreds of laws going into effect.
http://www.dailypress.com/news/local/dp-local_newlaws_0701jul01,0,4064564.story

Politics play a role in payday lending

Letter to the editor from Tommy Moore, Executive Vice President of Community Financial Services Association.

In passing legislation that eliminates payday advances, Ohio's elected officials chose to turn their backs on their constituents and play politics. The more than 30,000 letters from payday lending customers and the tens of thousands of e-mails, calls and meetings with payday lending employees were completely ignored.

It is a sad day when the opinions of editorial writers and so-called consumer groups count for more than the opinions of the people responsible for putting lawmakers in office.

Politics have real life consequences. As a result of this legislation, many payday lenders have already stopped making loans. Others are laying-off employees and closing stores. Companies are doing their due diligence to see what options may be available. If companies are forced to operate under HB 545, they cannot.

Independent research has shown that without the option of payday lending, consumers bounced more checks, filed for more bankruptcies, did not pay bills and even choose dangerous options such as forgoing prescription medications.
The hard-working people of Ohio were ignored during this legislative process. The politicians who voted to ban payday lending will now have to answer to the millions of citizens who will be left without a regulated, short-term credit option and the employees left without jobs and health care benefits.

Source:
Moore, Tommy. (2008). The politics of the payday legislation in Zanesville Times Recorder.com.
http://zanesvilletimesrecorder.com/apps/pbcs.dll/article?AID=/20080614/OPINION03/80614001/1014/rss04

The Intent behind the Payday Loan Legislation

"The recent effort by Nashville's city council to alter zoning restrictions brings up some interesting questions. Should local government have the right to dictate where private industries place their stores? Most businesses try to locate stores where their customers are. Every business aims for high traffic retail corridors that provide a good customer base."

What is the intent behind rezoning small congested areas? "If the rezoning is to encourage retail diversity, then that is an acceptable reason and we understand. However, if the rezoning was intended to limit access to these services, then we take issue with the decision."

Despite what some critics may say about payday loans, the service is popular with consumers needing payday loans to meet their short term financial needs or unexpected finances. "Surveys show that payday loan customers nationwide are overwhelmingly satisfied with the service, a fact confirmed by state regulators across the country, who report the fewest complaints of any financial businesses they regulate."

"It seems the only people who complain about payday loans are those who have never needed the product. It is never our customers who ask to have the number of locations limited in a given area. They want the product to be convenient and available."

"Jacob Covert is vice president of government affairs for Check Into Cash, Inc., a payday advance company with headquarters in Cleveland, Tenn."

Source:
Covert, Jabo. (2008). What is the real intent of such legislation?
http://www.tennessean.com/apps/pbcs.dll/article?AID=/20080525/OPINION01/805250371/1008

Payday Industry Urges Governor to rethink the Legislation

A recent letter from the Community Financial Services Association of America (CFSA) to the Ohio Governor Ted Strickland, advocates a review of the payday loan legislation bill that recently passed. The new bill imposed a cap on the fees that lenders are allowed to charge. This inadvertently caused many stores to close and a decline in the industry in Ohio.

The CFSA suggests that the consequences will affect the economy, employees and the customers.

D. Lynn DeVault, CFSA president, writes, "Vetoing this legislation would ensure that working families continue to have access to a state-regulated small, short-term credit option and that the six thousand Ohioans employed by the payday lending industry are not at risk of getting turned out into the state's unemployment lines."

The letter is available to review at http://paydaypundit.org/wp-content/uploads/2008/05/ltr-to-gov-final-signed-051908.pdf.

Source:
Medsker, Lyndsey. (2008). Payday advance industry urges governor to veto legislation. http://kingsrightsite.blogspot.com/2008/05/payday-advance-industry-urges-governor.html

What's happening with the Legislation in the U.S.

Lawrence Meyers, an individual involved from a financial standpoint with payday loans, provides funding for US-based payday lenders. He has provided his opinions on the payday loan industry in a recent interview.

The current legislation is under consideration in the state of Ohio. With the new laws payday loan companies will only be able to charge a 28% APR, a 30 day loan term and provide their clients with up to 4 loans per year. Meyers believes that with these new restrictions, payday lenders will not be able to survive. He states that "a 28% APR rate cap means 28% divided by 26, or 1.07% every two weeks. That's $1.07 per hundred instead of $15 per hundred. That is a 93% revenue cut. Revenue collected drops to $750 every two weeks."

He further argues that even if the payday loan industry is removed, the demand for access to immediate funds will still exist. He fears that those individuals will be forced to resort to businesses outside of the country in order to receive those funds or they simply will not be able to make all ends meet.

There is a lack of options or alternatives for those who need have immediate financial needs. This needs to be considered before implementing the restrictive guidelines for payday loan lenders and removing payday loan companies.

Source:
Barrett Simon. (2008). An Interview with Lawrence Meyers about Payday Loans in Interview, Society and Culture. http://www.bloggernews.net/115609

House Bill 545- The Payday Lending Bill

The payday loan bill that was passed which regulates the lending industry, awaits a vote in the House of Representatives. The controversial bill proposes to cap the annual percentage rate at 28 percent on payday loans, which is a drastic drop from the 391 maximum annual percent. It would also limit borrowing at $500 or would be based on 25 percent of a consumers monthly pay. Borrowing would also be restricted to only four times a year and the loan would be extended to 31 days as compared to 14 days.

"Washington, D.C.-based Community Financial Services Association of America, an industry advocate, called the bill's passage an act of "ignoring the pleas of tens of thousands of customers and employees."

"Operating under H.B. 545 is not economically feasible," D. Lynn DeVault, the association's president, said in a statement. "Our member companies say they expect stores to close and jobs to be lost."

Consumer Information about U.S. Payday Loans

Payday loans are a short-term alternative to meet financial needs. The money is usually deposited directly into a personal bank account the same day and is due back plus interest on the following payday. Sometimes, just the fees will be withdrawn and the loan amount will be rolled over to the next payday.

Usually loans are provided in the sum of $50-$1000 dollars. The average loan term is about two-weeks long. The fees for borrowing $100 for two weeks range from $15-$30 depending on the payday loan company and on state legal maximums.

Most lenders do not conduct a credit check in order to determine if consumers are eligible for a loan. In most cases consumers need to be employed full time for at least three months, be at least 23 years of age, and make an average amount of income. Consumers also need to have an open bank account in their name.

The payday loan industry:
"At the end of 2006, the Center for Responsible Lending reported about 25,000 payday loan outlets in the United States and annual loan volume of at least $28 billion, with almost $5 billion in loan fees paid by consumers. Industry analysts estimate annual loan volume of more than $40 billion, with over $6 billion in loan fees paid by consumers."

New Rules for Payday Loan Companies Attract US Lenders

As the legislation moves into the Canadian provinces, the US is closely monitoring the results. The current legislation is in review as each province determines if the law will be passed that sets a maximum on borrowing limits, fees and also provides increased consumer protection acts. The laws will also create a more viable industry as those companies who do not follow the new legislation will be ruled out.

With the new laws looking at being enforced, US lenders are looking at expanding their services into the Canadian market.

Payday Lending Meeting Consumer Needs

"As the debate over payday lending plays out in the courts, it is important to remember that working adults are best served when given a variety of options and trusted to make financial decisions based on what's best for them and their families.

Eliminating payday loans as an option does not eliminate the need for short-term credit. Instead it forces consumers to choose between more expensive alternatives such as fees for bounced checks, overdraft protection, or late bill payments or even unregulated off-shore Internet lenders. All products or fees which consumers say they use payday loans to avoid.

In addition, no one is offering real alternatives to payday loans. To date, almost all of the attempts to create payday loan alternatives have either been charity-based, required government subsidies, unavailable to the general public, unprofitable or unsustainable.

I hope elected leaders in Arkansas ask themselves if restricting access to our industry without providing people with any viable alternatives to short-term credit is really the responsible thing to do."

Article: Who is the Payday Lending Industry targeting?

A study has been released indicating that payday lenders are targeting certain members of the community and enticing them to get payday loans. Results of the study, "Usury Law and the Christian Right," indicate that conservative Christian Americans are now a prime target. Lenders are extremely outraged and state that their clients represent a broad demographic population and therefore cannot be grouped based on race, sex, or religion.

The fact that lenders provide a service to over 19 million individuals, is an indication that that this is a needed industry. Research shows that payday loan customers tend to be middle-income, educated, working families with half earning at least $25,000 and 58% having attended college. There is also criteria for individuals to be approved for payday loans, such as being employed full time for at least three months and having a valid bank account.

The payday loan industry is providing a viable service to individuals. No particular segment of the population is being targeted. These businesses are available to those with poor credit history or those with immediate short-term financial need.

Costly Alternatives to Payday Loans

Consumers are concerned over the high rates of borrowing a payday loan and many states have prohibited payday lending. What is the alternative for those in need of immediate funds? Life is unpredictable and even those families with an average income sometimes come into financial difficulties and need immediate cash. Payday lenders are providing a viable service to those individuals if they have no where else to turn to borrow funds.

Prohibiting payday lending may not be the solution. Legislators need to focus on the reason individuals are relying on payday loans to meet their financial needs. Alternatives to short-term credit are almost non-existent since those attempts to create alternatives have been unsubstantial.

There is a cap on the fees and rates of interest that lenders are allowed to charge on borrowing. Payday loans are also intended for short-term borrowing which means that they are provided with the intent that individuals will pay back the loan on their next payday. Consumers need to be responsible when borrowing a loan and be aware that it can become costly if they do not pay their loan back in full on their following payday.

Source:
Andersen, Darrin. (2008). Alternatives to payday lenders even more costly. http://blogs.denverpost.com/eletters/2008/02/22/alternatives-to-payday-lenders-even-more-costly/

Payday Loans and Cash Advances