Payday Loan Times

Payday advance loans are becoming an increasing burden on the purse strings of the poorest families, a new survey conducted by consumer information site cashdayadvance.net suggests.

Glasgow, 27 June 2007 - Attractive payday advance loans are becoming increasingly popular for struggling families, a new survey reveals. The study into the borrowing habits of households with below-average earnings found that the rate of growth in the payday loan sector amongst this demographic is increasing at a considerably more rapid rate than across the rest of the market, a finding that has worried experts.

Industry analyst Fraser Lamb finds the outcome of this new no faxing payday loan survey alarming.

“The fact that these types of loan are so readily available to those with poorer credit ratings makes them ideal as a stop-gap solution. The problem is that many people find themselves stuck in a constant loop of borrowing against their wages, which can be very difficult to reconcile at the end of the day. I want to see a shake-up of how these types of finance are marketed, and I want to look at the various ways in which we can make it clear to people that although payday advances are useful, they shouldn’t be used as a lifeline on a continual basis.”

While payday loans are found to be falling in price on average, statistics show that they continue to be one of the highest interest forms of finance available to consumer borrowers

Across the Atlantc, hugely expensive credit deals are being pushed by companies capitalizing on the need of cash-strapped households to find money quickly in the run-up to Christmas.

Provident Financial, the credit-pusher giant that specializes in lending to those on low incomes and those without bank accounts, has blitzed tens of thousands of homes with junk mail cash advance loan offers.

The typical rate of interest charged is 177%, though for some borrowers it could be more than 300%.

“If you’ve realized you need extra cash for Christmas, don’t worry,” gushes Provident’s offer. “Don’t miss out on the Christmas you want!”

The mailings contain its much-loved gimmick of a fake check made out to the addressee, with the words: Turn this into CASH - NOW! And you thought American payday loan companies were out of hand.

Other firms are offering even dearer credit, with the APR running into thousands or, unbelievably, tens of thousands.

Paydayuk.co.uk, for instance, charges borrowers 50 pounds for a loan of 200 pounds, which for short-term borrowing is an APR of more than 22,600%.

Another deal is from uncle-buck.co.uk, which charges borrowers 75 pounds for a one month payday advance loan of 250 pounds - making a total repayable of 325 pounds. This works out at an APR of 2,339.3%.

Several other online companies, such as yesloansuk.com and payday-express.co.uk, offer similar deals. They target those who cannot borrow elsewhere with supposed deals on online payday loans.

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As online payday loans - and, of course, websites sponsoring them - spring up over England, a need has arisen for an unbiased guide to help borrowers understand the pros/cons of these resources.

Enter The UK Payday Loans Guide. Exit confusion.

This site provides a wealth of information to anyone merely contemplating the use of a payday advance. Foe example:

• The average no fax payday loan is not the impoverished, but the middle-class, especially women.
• Nurses and teachers are the most common borrowers; those with adequate salaries for their usual expenses, but budgets that can't always handle unexpected bills.
• Car repairs, deaths in the family and illness are three of the most common reasons listed for needing payday cash loans.

Unfortunately, consumers are not always aware of how the fees for payday loans can add up. While 10-20% may seem like a reasonable fee for a short-term loan, these numbers increase to over a thousand percent annually. In comparison to traditional loans, the fees involved are astronomical.

But traditional loans are often too large and even unavailable to many borrowers who have poor credit. Hence, the need for bad credit payday loans.

Payday advance questions: Frequently asked questions relating to regulations, fees, and comparisons to cash advances on credit cards or credit lines on checking accounts are explored in detail through this service.

Additionally, the history of short-term, payday cash advance lending in the United Kingdom is explained, as are definitions of usury and loan-sharking. With the expansion of high-interest lending practices in Great Britian, the need for a practical guide to payday loans seemed needed more than ever.

The practice of pay day loan lending is exploding inside and outside the United States.

To compete, many credit unions feel pressure to join the trend for ultra-short, ultra-high interest loans, said Pete Crear, chief executive of the World Council of Credit Unions.

Creaer was in the New Zealand last week to address the nation's credit unions, which have about 185,000 members. A lot of these companies are beginning to offer resources similar to same day payday loans are making payday loans, though hopefully at reduced rates.

In New Zealand, Credit Union Waikato admits making such loans, while others say they're contemplating the same. But such businesses are meant to protect the consumer and, therefore, are reluctant to join a practice which traps borrowers in a cycle of perpetual, high-cost debt.

In the country, there are three online payday loan lenders - Cantwait. com, Paydayloans.co.nz and Chequers Finance. They all have websites showing smart, hip, young people partying thanks to the use of cash advances. They make loans to anyone, anywhere in New Zealand through their phone, fax and web-based operations.

Chequers Finance, which lends for a minimum of four working weeks, charges $8.50 a week for a $100 loan, a real annual interest rate of 442%. The others follow suit.

Individuals - in any country - are always likely to look into cash loans online due to the ease of acquiring them. You never need to leave your home or fax in any documents to secure the money.

Cash Now is keeping busy. The payday loan company has expanded its technological reach - and is now expanding its cash advance business into the Asian market.

Mainly focusing on China, Taiwan and Hong Kong, the new faxless payday loan operations involve the use of the following, newly registered domain names:

• Cashnow.hk.cn
• Cashnow.mo.cn
• Cashnow.tw.cn
• Cashnow.org.cn
• Cashnow.net.cn
• Cashnow.com.cn

Initially these domain names will point to the company's main portal www.cashnow.com until the new sites are developed in the Chinese language.

The Asian payday loan online expansion will be managed by the company's office in Adelaide Australia.

"Cash Now has been in Australia since 2003 and the company has dabbled into Asian expansion for some time now, this is a natural evolution and process," said John Falting, Cash Now's President and Director of Operations in Adelaide Australia.

The faxless payday advance company plans to launch Cash Now in Tokyo in March 2007. There will be a Franchise Show & Business Expo held at that time.

"This is the largest meeting place for franchises/new business companies and people who are looking for business opportunities" said Garr Winter Cash Now's Director of Marketing. 

Mr. Winter added that the company is "very excited" about the opportunity to offer helpful payday loans and cash advances overseas. 

Cash Now Corporation (Cash Now), a well-established payday loan company in the U.S. has announced it's completed the 100% takeover of Australian and New Zealand Master Franchise.

Cash Now Pty Ltd. has been operating Down Under for three years, experiencing outstanding growth in the instant payday loan and check cashing franchise market with 21 stores now using the Cash Now system.

The growth prospects for such an industry are outstanding, as less than 100 stores of this type are currently in business in Australia and New Zealand. With over 24 million consumers between the two nations, there are many possible faxless payday loan clients out there!

Due to student loans and a lack of credit, you'd think young consumer were most at risk for falling into debt. These individuals are not familiar with online payday loans, either; they're more likely to not understand such interest rates.

And, don't get us wrong, this age group does fall into debt. However, recent information from abroad makes it apparent that UK consumers in their 50s are increasingly struggling with credit card debt. A government report published today warned that the number of insolvencies in England is likely to rise as this trend continues.

The Consumer Credit Counselling Service (CCCS) said that while credit card spending has slowed over the past 12 months, people aged 53 and above are the only age group still increasing their spending on plastic. No information was made public about the tendeny of these individuals to apply for cash loans of any kind.

The proportion of people between the ages of 53 and 59 seeking help from the above group has risen to 23% of the total, up from 19% in 2003. These over 53s now have the biggest outstanding credit card debt in the nation, while those in their 60s have increased their credit card borrowing by one third between 2004 and 2005.

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More than a third of the UK population is 30 days away or fewer from financial crisis, according to new research from Prudential.

The life and pensions provider conducted a study into British employment and financial planning, and found that an alarming number of working residents admit to having little or no savings. Sufficiently covering expenses, should they stop working, is very unlikely for many British citizens.

This means that they are effectively living from payday to monthly payday with little to no buffer. Is a surge in payday loans far off?

One in 10 working adults, equivalent to 2.9 million people, said they were concerned about their financial future, fearing their jobs were in imminent danger. Job insecurity is increasingly becoming a worry for the population as unemployment levels are at four-year highs.

"No-one likes to think that they could get a severe illness or lose their job, but what if the unthinkable happened? Without any savings or protection, many people put themselves in a vulnerable position," said Angus Maciver, Business Director of Insurance at Prudential UK.

In fact, 30 percent of respondents said that they had no insurance to cover job loss or redundancy. Only 1 in 10 said that they could cover periods without employment. That makes British citizens prime target for online payday loan solicitations in the event that they come up short on cash at a critical period.

The problems of rising consumer debt have been well reported, and this could be one reason for the widening savings gap. Many banks highlight a rise in personal bankruptcy in their results as customers struggle to meet repayments on credit card and personal loans.

The findings come weeks after Prudential released the results of its six-monthly Retirement Index, which discovered one in four pensioners, more than 2.7 million people, did not have sufficient income to cover all of their financial commitments. Working Britons must take adequate steps to ensure their future.

"We urge people to contact a financial adviser to plan their finances, in order to achieve their everyday financial aspirations," Maciver said.

Prudential believes the answer lies in overall financial awareness, but also in life insurance products, such as its Flexible Protection Plan. Customers can use the plan to help to cover mortgages and provide general financial support in the event of illness or death.

This can't be a coincidence: as reports surface that more residents of the United Kingdom are facing involvency than ever before, the first online payday loan opportunity springs up in that nation.

Let's start with the first piece of information: A recent poll shows that one in five people with more than 10,000 pounds in unsecured personal debt, is considering filing for bankruptcy.

The survey, conducted regularly by debt consultancy Thomas Charles, shows a rise since March, when one in seven was considering insolvency.

Does this mean that resources such as faxless payday loans would help consumers or hurt them more? There's no definitive answer.

The government will reveal on Friday the latest UK insolvency figures, which are expected to show a fresh increase.

The survey suggested that more people were having difficulty repaying their debts than ever before; as the percentage of those who said that they couldn't make their monthly debt repayments increased between March and July, from 21% to 23%.

Drastic action, payday loan action needed? Malcolm Hurlston, chairman of debt charity Consumer Credit Counselling Service (CCCS), said many people were choosing insolvency who ought not to.

"We find that insolvency is the right course in about 3% of cases," he said."It is often better to take less drastic action, such as agree token payments with creditors and draw up a plan to pay off debts gradually."

Mr Hurlston did not mention anything about instant payday loan use. He added that the CCCS had seen a 40% annual increase in the number of people asking for help with debt.

Cash Now Corporation is a pioneer in the instant payday loan industry. Adding to its impressive resume, the company recently announced that new Master Licenses, called Enterprise Premium Solution Packages, are now available within the Australian Market.

Such Master Licenses meet the needs of firms and entrepreneurs that intend to establish multiple Points of Presence for payday loans and a variety of related financial services, either through sub-licensing Cash Now services, or development of their own retail and/or Internet network.

A further explanation: The Enterprise Premium Solution package provides a full and comprehensive suite of financial products and services related to the quick payday loan business, including software, hardware and retail store location products. The Master Licenses are designed to meet the current and future needs of licensees as they grow their businesses and expand on a geographic as well as product portfolio basis.

The package provides full back-office functionality, which not only allows real-time analysis of all activities within the Master Licensee's network, but also includes full ongoing support by the Cash Now's centralized IT infrastructure. Any problems with online payday loans can be readily dealt with.

Cash Now boasts many advanced proprietary applications designed specifically to serve the needs of this unique and rapidly growing industry, including online loan application and evaluation software, which can assess credit ratings based on sophisticated algorithms.

John Falting, Chairman & CEO of Cash Now Corporation, commented on the expansion:

"The Australian and New Zealand markets are very promising. Our revolutionary licensed approach to the payday loan business provides truly 'best of breed' software solutions and retail training systems that allow new licensees to quickly deploy a full-service, multi-product line of products and services that are at the leading edge of the industry."