Payday Loan Times

It all began in New Hampshire. That's where Advance America opened its first store. As the payday loan company faces stock issues, its spokesperson talked to The Union Leader.

“We typically charge $20 per hundred,” said Jamie Fulmer.

Expressed as an annual percentage rate, therefore, Advance America’s interest is 521.43 percent. Certainly seems like a lot for an instant payday loan - but, Fulmer said, in New Hampshire, Advance America’s maximum term of the loan is 19 days. Subsequently, someone who borrows $100 and pays $120 back within 19 days is paying only 20 percent expressed as a simple percentage.

As Fulmer defended the practice of payday loans in the state and around the country, it's worth noting that personal loan companies are regulated by the state Banking Department.

“We also go out and examine them on an 18-month cycle just like we do with all our other licensees unless we have some reason to go more often,” Commissioner Peter C. Hildreth said.

Few payday loan complaints: The department has logged only four complaints against payday and loan title lenders in the last 12 months. New Hampshire has no usury law, and no cap on interest rates.

“The problem with title and [payday advance] lenders from the public point of view is that the APR turns out to be 300 percent, 500 percent. I saw one that was 2,000 percent,” the banking commissioner said. “The reason it’s so high is they are short-term loans, so if you extrapolate it from a two-week loan to a one-year loan, that’s why it’s a 300 percent APR or a 1,000 percent APR.”

However, he said, pay day loans can only be for short periods.

“If you take a loan for two weeks, you can’t just roll it over for another two weeks,” Hildreth said. Advance America spokesman Fulmer said, “Nationwide, our average duration is just under 16 days.“

Fulmer also explained how a no credit check payday loan can benefit individuals in need.

"These are hard-working, middle-America folks who don’t have ready access to credit but need additional cash,” he said.

He said Advance America’s $20 per hundred loan fee is a cost-competitive alternative to writing a bad check, when the fees that bank and vendors charge for bounced checks are taken into consideration.

To obtain a cash loan from Advance America, consumers complete an application form, sign an agreement and write a check to the firm for the amount that they are borrowing plus the fee.

“They then make an appointment to return to the store and pay back the amount of the check, typically two weeks, and they receive from us either cash or a check and then they return on their due date with cash to reclaim their check,” Fulmer said.“Overwhelmingly, our customers pay us back on tim."

Most Advance America customers fall between ages 18 and 44, with the average just under 40, and have a median household income around $40,000. Almost all have a high school diploma and possibly some college. Just under half own their own homes.

“These folks understand that they have other choices and they understand the rates associated with our [payday loans no faxing],” Fulmer said.