Payday Loan Times

Considering the possible debt trap payday advance clients often face as a result of these resources, the Center for Responsible Lending wishes to ensure that readers are aware of alternatives.

Here’s a list of ways to receive quick cash that does not include any sort of bad credit payday loans:

Payment Plan with Creditors
The best alternative to fast cash loans is for consumers to deal directly with their debt. Many creditors will negotiate partial payments if a plan is in place. Working out a payment plan with creditors can allow the consumer to adjust billing to pay off bills over a longer period of time.

Advances from Employers
Some employers grant paycheck advances to employees. Because this is a true advance, and not a loan, there is no interest and the advance is therefore cheaper than any online cash advance.

Consumer Credit Counseling
There are various consumer credit counseling agencies throughout the country that can help consumers work out a debt repayment plan with creditors or develop a budget. These services are available at little or no cost.

Emergency Assistance Programs
Many faith-based groups and community organizations provide emergency assistance, either directly or through social services programs. For example, in partnership with state agencies, the federal Low Income Home Energy Assistance Program provides financial assistance to low-income households that are in a heating or cooling (weather) related emergency.

Credit Union Loans
Many credit unions offer small, short-term loans to their members. For example, North Carolina State Employees’ Credit Union offers members a salary advance loan at 11.75% annual interest - 30 times cheaper than a typical payday loan. Some credit unions also offer free financial counseling and a savings plan to help members get back on their feet.

Cash Advances on Credit Cards
Credit card cash advances, which are offered at about 30% APR, are much cheaper than getting a payday loan. Some credit card companies specialize in consumers with financial problems or poor credit histories.

Secured credit cards are another option. A secured credit card is tied to a savings account. The funds on the account ’secure’ the amounts charged on the card. Once a consumer has successfully used the secured card for a period of time, they can then qualify for a regular unsecured credit card.

Military Loans
Several companies offer loans ranging from $500 to $10,000 to active duty and retired military personnel. Payday loans are 10 to 13 times more expensive than these small consumer loans. These loans cost less than payday loans because they have much lower APR, ranging from 33% to 34.99%.

The Albuquerque Tribune has posted a Q & A session with Attorney General hopeful, Gary K. King.

In it, the 51-year old Republican answers a question regarding his stance on cash advance loans. Here it is:

How much authority does the attorney general have to regulate payday loans and title loans? What would you do about this issue?

The AG may have authority to address some payday and title loan issues through the Unfair Trade Practices Act, but I do not believe the authority is sufficient to adequately address abuses of the system. I am proposing a two-pronged approach to dealing with predatory [quick payday advance] lending practices in New Mexico.

First, we must have legislation that regulates unfair lending practices, by controlling interest rates and limiting the “renewal” practices that lead to loss of a home or car as a result of borrowing a small amount of money initially.

I believe we also need to address the issue of lack of access to capital in underserved rural and/or minority communities. We must develop a “micro-loan” program to assure that all of our citizens have access to needed credit [in lieu of possibly harmful payday cash loans].

You’re stuck in debt. Therefore, you wish to take out a few faxless payday loans in order to dig out of it.

It’s the type of thinking behind most people who acquire these resources, but the most sought after book on credit repair, “How to Get out of Debt: Get An “A” Credit Rating for FREE,” by Harrine Freeman, doesn’t exactly mention cash loans as a viable option for completing such an important task.

The guide provides consumers with step-by-step strategies to eliminate debt, receive a high credit rating, maintain their good credit, and create their own spending plan.

“How to Get out of Debt” comes at a pivotal time:the Federal Reserve reports that consumer debt has topped to over $2 Trillion dollars as of August 2006. Over 20% of consumers have maxed out their credit cards, bankruptcy filings are at an all time high and more and more people are applying for payday advance loans.

The book’s author, Harrine Freeman, knows about debt firsthand, having maxed out over thirteen credit cards, totaling $19,000 in debt.

“I got in debt when I was in college. I lost a job and my car was repossessed when credit card companies began to harass me. I finally took a part-time job, in addition to a full time job, to pay off my debt,” she said. “My passion for writing this book and starting a credit repair business is to meet my clients where they are by using practical steps that have helped thousands of people recover from financial ruin.”

In “How to Get out of Debt,” Freeman shares many tips to keep the credit card companies from knocking at your door:

1. Chop Credit Cards into Tiny Pieces: Stop using your credit cards and pay with cash.
2. Get Ahead: Pay more than the monthly minimum. If you can’t, it’s time to cut your spending.
3. Control the Reins: Develop a realistic plan to reduce your total debt.
4. Get a Deal: Reduce your interest rates, but be careful of the fine print—a credit card with 0% interest could cost you thousands in interest depending on how the credit card is structured.
5. Work it Off: Get a part-time job in addition to your full time job.

Most of these tips seems fairly obvious - and none of them include quick payday loan use.

Higher fees on payday cash advances led a 14 percent gain in revenue and a 35 percent increase in profit during the third quarter at Fort Worth-based Cash America International, the country’s largest operator of pawn shops.

According to The Star-Telegram, Cash America said it earned $12.9 million, or 42 cents a share, during the quarter ending Sept. 30. Revenue totaled $165.6 million.

The earnings slightly exceeded Wall Street estimates of 41 cents a share, and the company’s shares gained 60 cents a share, or 1.4 percent, to close at $42.10, a new high. The cash advance company’s shares are up about 80 percent for the year.

Altogether, cash advance payday loan fees rose nearly 20 percent (to $48.4 million), topping the company’s pawn fees of $39.4 million in the same period by 23 percent. Cash America’s payday revenue first exceeded pawn loan charges in the second quarter of 2005 and have continued to outpace the company’s traditional pawn loans, although merchandise sales still account for the largest share of revenue.

Payday advance loan lending also became more important to the company Sept. 15 when Cash America closed its purchase of CashNetUSA, an online payday lender.

CashNetUSA’s approximately $27 million in outstanding payday loans helped Cash America’s payday loan portfolio rise 51 percent compared with a year earlier and will further boost payday fees in the fourth quarter.

In a conference call with financial analysts, President Dan Feehan said continued growth of the online payday loan operation will probably temper the number of brick-and-mortar payday loan stores the company operates.

While Internet-based lending is a small portion of the industry, Feehan said, it is likely to grow strongly because of the convenience and anonymity it offers customers.

The Eagle Tribune recently talked to Michael McKeon. The Masschusetts resident knows 25 percent interest each month is high, but when asked why he took out a $500 loan anyway, he just shrugged a little and said, “Desperate times. …”

McKeon, 27, and his wife Rachel, 30, recently put up the title of their only vehicle - a 1994 Chevy van - as collateral against a loan. They were going to be short on their $1,500 mortgage payment without it.

The couple took a friend’s recommendation and went to New England Auto and Payday Loans Inc., a Salem company offering high-interest cash loans leveraged against car titles.

The company, which declined to comment for this article, doesn’t do credit checks and can usually make cash available the same day a person applies.

In Southern New Hampshire, businesses offering fast cash abound. Just down the street from the storefront where the McKeons got their loan is LoanMax, another company that lends against car titles. The McKeons didn’t go to LoanMax because, they said, that company requires borrowers turn over a spare key to make repossession easier.

That payday loan company also declined to comment.

Across from LoanMax is Cash for Gold, a jewelry dealer that lets customers sell or pawn their jewelry. And just a short drive in the other direction is an Advance America branch, offering up to $500 instant payday loans leveraged against a personal check that the company promises not to cash until repayment comes due.

A problem with payday loans: Credit counselors generally say fast cash schemes - particularly payday and title loans - are a bad idea.

“It’s about as dangerous a proposition as it gets,” said Nick Jacobs, spokesman for the National Foundation for Credit Counseling in Silver Spring, Md.

Payday advance and title-lending industry representatives counter that short-term loans are a good choice for people who otherwise face bank overdraft fees, credit card late fees or worse.

“Our products and services present rational, cost-competitive alternatives,” said Jamie Fulmer, spokesman for Advance America, a national chain that offers paycheck advances.

(Read on …)

There’s no doubt that regular and no faxing payday loans get a tough rap in the media - but with almost 800 state licensed payday lender locations in Virginia, they can’t be but so bad, can they?

According to Jamie Fulmer, director of investor relations for Advance America (which has 131 locations in Virginia and 16 in the Richmond area), providers of payday advance loans simply offer an important service for people that run into financial difficulties.

“We believe that our products and services are designed to help middle-income Americans overcome their short-term financial challenges,” Fulmer said. “Our customers understand the cost associated with this product. They understand that our product is a less costly option for them than say bouncing a check.”

To explain the advantages of cash loans, Fulmer used himself as an example.

“If I were to bounce a $100 check at my bank in Spartanville, S.C., they are going to charge me about $32 for the bounced check and that is not to mention the $25 the vendor where I wrote the check is going to charge me. So that one bounced check is going to cost me $57.

“If you compare that to the cost of a payday advance, which on average is about $15 per $100 borrowed, you can clearly see why the payday advance product is a valued option. The other thing is that the payday advance option doesn’t carry the negative credit report options that a bounced check does.”

Checksmart’s Satterlund concurs adding that some times, for some people, a cheap payday loan is the only option.

“Who wants to admit that they are low on cash and are in a bad situation?” Satterlund proposes. “I don’t. I would want to stay anonymous. I don’t want it made public what my finances are.”

There, Satterlund says, payday advances are an alternative that work. He notes the hundreds and hundreds of people that are using then successfully, stating the voice of critics is simply louder.

Many would probably agree that the payday advance industry has been taking it on the chin recently.

Between reports of the recently signed federal laws that have effectively stopped payday loans for members of the military to the dozens of weekly editorials that speak out against the industry, it seems that no one has anything nice to say about payday lenders.

It appears, however, that a few in the industry are fighting back with positivity. Richmond.com had the report.

Payday loan PR campaign: In Texas, instant cash loan lender ACE Cash Express partnered with Junior Achievement and the local consumer credit commission this school year to distribute one million book covers, which espouse the importance of financial responsibility.

In South Carolina, Advance America, one of the largest payday lending services in the United States, donated $50,000 to United Way for the advancement of financial education programs.

In Virginia, however, Checksmart, a national payday advance service with more than a dozen locations in the state and three in the Richmond area, decided to take a more direct approach to combat the growing negative image of payday lenders.

The cash advance company recently sponsored two financial literacy classes, one in Hampton in August and an Oct. 17 class in Richmond. The classes, which were free to the public and included a free lunch, were designed and conducted by the Virginia Society of Certified Public Accountants, a non-profit organization that offers hundreds of financial workshops around the state each year.

“The lack of [financial] education is impacting people across the board but it seems that this particular industry is being targeted,” said Michele Satterlund, who represents Checksmart in a lobbyist capacity. “We heard that message and we thought ‘what can we do to address this?’”

Result of the payday loan education classes: The well-attended classes, which were advertised throughout Checksmart’s locations, were titled “15 Financial Myths Demystified” and covered a variety of topics including general money management and proper spending habits. They were not specifically related to cash loans.
(Read on …)

The Albuquerque Fire Department is investigating multiple fires around the Duke City, including one that burned down a payday loan business.

The AFD said it was about 4:15 a.m. Friday when a passer-by called 911 after seeing smoke and flames coming from the payday advance loan business at 4th and Candelaria in the northwest part of town.

Fire crews arrived on scene and were able to put the fire out, but not without it causing substantial damage to the office in the building.

“When we arrived, we saw smoke and flames visible coming out of one of the windows”, said AFD battalion commander Patrick Feist. “The building itself is a mobile home facility, so obviously those structures go up very quickly.”

Fire investigators said the fire started underneath the office of the facility and is still being investigated. It’s not assumed, at the moment, that anyone was intentionally trying to ruin this quick cash advance operation.

AFD crews also are looking into as many as nine car fires that started overnight around Albuquerque. All of the fires were in neighborhoods around the University of New Mexico. Police do not have anyone in custody in connection to these fires.

It’s no longer so easy to acquire a regular or no faxing payday loan in Ohio.

Residents seeking loans now have a watchdog on the lookout for predatory lenders, in the form of legislation signed into law this month that also gave the state attorney general the power to pursue offenders.

The Ledger Independent quoted Senate Bill 185, in which rules are clarified on the “methods loan officers, mortgage bankers and non-bank mortgage lenders can utilize in determining a consumer’s ability to repay a loan and whether a consumer received a reasonable, tangible net benefit from a refinanced loan.”

Speaking to payday loan lenders: Part of the law addresses the behavior of lenders; in section 1345.02 (A), it reads:

“No supplier shall commit an unfair or deceptive act or practice in connection with a consumer transaction. Such an unfair or deceptive act or practice by a supplier violates this section whether it occurs before, during or after the transaction.”

Ohio Attorney General Jim Petro has initiated a series of meetings with representatives of fast cash loan lending institutions, consumer agencies and the Ohio Department of Commerce for suggestions on more proposed rules.

To make sure its customers are treated fairly, Check Advance in Maysville posts what it calls its Best Practices List.

“It shows the customer how they can work their way down in loan amounts,” said Penny Adams. “We try to work with customers so they do not get stuck in a system of constantly owing.”

At U S Bank, which has several branches in the area, customers are not declined for loans without a second look at their financial picture, but putting people in a financial bind is not part of the process.

“We are in the business of helping people,” said Teri Charest, a US Bank public relations representative.

In Kentucky, anti-predatory lending law enforcement came to the forefront in 1999, when two Kentucky-based companies were cited with five payday cash advance lenders from across the country identified and investigated in Operation Home Equity conducted by the Federal Trade Commission, for lending practices the FTC determined to fall under the definition of abusive lending practices.
(Read on …)

The Oklahoma Department of Consumer Credit is warning Oklahoma residents about solictations from out-of-state, online payday loan companies and other financial services.

KTEN’s Andrea Kurys had the report.

Officials say the number of complaints filed regarding online offers for loans have been steadily increasing.

In the state, when a customer applies for a payday advance, there are strict requirements in place intended to protect consumers. The loan companies must verify information on employment history, check the credit of applicants and immediately inform the individuals about interest rates and fees associated with a loan.

But unlicensed, out-of-state, operators may not provide any consumer protections - and experts say fees and terms can exceed Oklahoma limits.

Ardmore credit agencies advise potential cash advance loan applicants to do all financial business in person if possible and avoid giving out any information online. Tammy Pease, the assistant manager of ‘Your Credit’ said:

“I would not give them any confidential information regarding myself or anyone else and tell them if they need information from me, that they can give me an address that I can actually physically go to and then give them my information myself.”

Pease says trouble with payday loans from out-of-state lenders can damage your credit score.

Complaints about any cash loans can be filed with the federal trade commission at www.ftc.gov. The FTC works with consumers to prevent fraudulent, deceptive and unfair business practices.