Advance America, Cash Advance Centers : US payday lenders point fingers to ...
The storefront payday lending industry has been slowly bleeding over the last few years as states, until now the industry's major regulators, have enacted tougher laws designed to protect consumers from the controversial short-term high-interest loans.
But lenders say the tough new laws have pushed consumers into the murky world of lightly regulated online lenders, many of which have been accused of aggressive collection practices, unauthorized charges, and violations of disclosure laws.
Storefront lenders fear the Consumer Financial Protection Bureau could unleash new regulations that strip their profitability while letting online competitors flourish. The argument is strikingly similar to the one that traditional banks have used to encourage federal regulation of payday lenders.
Payday lenders will get a formal chance to deliver their pitch on Thursday when the CFPB holds a field hearing about the industry in Birmingham, Alabama.
"Regulators sometimes with good intentions don't take into account that there are true issues that come up in peoples' lives where they need access to short-term cash," said Tony Scales, founder of Express Check Advance, which has 120 storefront payday lenders in eight states.
"If mandated regulation makes it where it is not profitable, it will drive customers to higher-cost products."
Jamie Fulmer, a spokesman for Advance America, the country's largest payday lender, also warned that overregulation could drive consumers to online lenders that have been able to operate under the regulatory radar.
" end up paying more, being more susceptible to being taken advantage of and don't have anybody to turn to," Fulmer said.
With Obama's recess appointment of Richard Cordray earlier this month to head the CFPB, the agency gained new powers to write rules that govern the short-term loans.
It now has the power to crack down on conventional payday lenders and the more shadowy online lenders, but it is unclear how the CFPB will prioritize its approach.
arkansas cash advance payday loans software - News
In a storefront payday loan, borrowers get cash from a lender in return for a check postdated for payday that covers the loan amount plus a high interest rate of around 17 percent over two weeks on average, according to The Community Financial Services
"We are looking at state models and assessing the outcomes of those models," said Leslie Parrish, program manager for payday and small dollar loans at the new agency. "We will be examining to get to know the practices - to see if payday lenders comply
Cash Advance Pros and Cons | sohohi.com
Cash advances are great when you need emergency cash in a pinch. Whether you’re behind on the bills or just need some help, a short-term cash advance can get you back on your feet. However, just like any financial product, there are pros and cons to borrowing cash advances. Decide what’s right for you and whether cash advances are worth the extra cost for convenience. Always do what makes sense for your finances.
Pros Cash advances are approved quickly. You can walk out of the store with your loan or have cash wired to your bank account in about 1 hour. Because they’re so fast, many consumers depend on them for emergency spending. Bank loans and credit cards can take several days or weeks for approval, but cash advances are approved almost instantly.
Cash loans are also great options for people with bad credit. If you need to borrow cash but you’re concerned about your credit score, take out a payday loan for the cash you need. Cash advance lenders never run credit checks for their loans. Payday loans online are approved based on your income and bank account balance instead. As long as you earn a stable salary and have a bank account with a positive balance, you can get your cash loan approved with no credit check required.
Cash advances have flexible payment plans, especially from online lenders. It’s always best to pay off your loan in full, but online lenders also have installment plans available if you need them. Another great feature is the ability to roll payday loans over. Contact your payday loan lender in order to find out their rollover terms.
Cons Payday advances online can’t really be relied on for long-term lending. Cash amounts are small – $1500 and less – and the interest rates are high if you’re borrowing cash for more than just a week or two. Cash advances are designed for short-term emergency use, not long-term financing. If you have an expense that needs a bigger loan, you’ll need to go to a bank or apply for a credit card. Some banks have started to lower their credit standards for customers in desperate need of cash, and you can apply for a secured credit card to help with other big needs.