Archive for the ‘Finance News’ Category

20
Sep

How Important Is Payday Lending To Local Communities

Posted by Emily

More and more families and shared households are facing a common challenge on a wider scale.  The challenge is the shortage of funds. The economy’s current state as well as the surge of job losses in this nation has left many families turning to new alternatives that would have never been previously considered.  We hear many testimonies and have been called “life savers”  in many cases during hard times. One customer reported that she was able to use a payday loan to avoid the high Non-Sufficient Funds (NSF) charged by the banks.  The average bank fee for (NSF) $35 per charge, compared to the finance fees charged by most payday lending companies which start at around $15-$20 and up. Many have depleted savings, and borrow money from friends and family to get by during critical times.  Many have taken on jobs that pay far less than what  the household was accustomed to bringing in.  While the unemployment rate is steady and job creation and development has been slow, many have begun to entertain the thought of obtaining short term loans.  This is where the Payday Loan industry fits into the picture.

Who are some of the consumers of payday loans? Having to borrow money is obviously not something most families like to report.  However, according to the Survey of Consumer Finance Data (SCF) the average consumer of a payday loan is approximately aged 36-39, is Caucasian, and has some college education, but  no degree.  Another %19 of borrowers taking out payday loans do have a college degree.  Industry figures as well as the SCF’s data show that the mean income for families who took out a cash advance payday loans was in the range but not much over $32,000, whereas the households bringing an income closer to $80,000 and above were less likely to take out a payday loan.  The Federation of International Civil Servants Association reports that their payday loan borrowers have an average household income of  more than $40,000.   Another report stated that the average family income for families taking out payday loans ranged between $25,000 to $49,000.

Much can be said from this data. Not only does it thwart the previous information stating that payday loans were only utilized by low income households, but it shows the frequent use of these loans by families with both low income and middle class incomes. It also clearly addresses the necessity of having access to this type of service for both income levels.

We may be able to help you during your cash shortage. Apply here

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18
Sep

Who Are The Banks Lending To? Can You Really Believe What You Hear?

Posted by Emily

Who are the companies lending money to the payday loan lenders? They are the banks, of course.  They are certainly not lending  to families and small business. In fact, these are the same banks who were bailed out by the government.  There are published reports where you will find quotes from these very bank lenders calling the payday loan industry a “bottom feeder” industry. So why are they doing business with them? For the huge profit. These banks are by no means hurting, but are making great profit at servicing this industry. Bank of America claims they treat “payday lenders as a discouraged industry.” But when their doors are closed is that really true?

These same banks have become slow to provide home loans for families and lend to small businesses, but instead have provided the financing for payday lending companies with whom they claim to look down upon and have distant dealings with.

This week in the Seattle Times, Bank of America stated “We treat payday lenders as a discouraged industry” “We have limited appetite for doing business with them.” But according to the chart below, you can see where a good portion of the money is going.

In their defense, banks, including B of A have begun to impose stricter rules for compliance . They do appear to try to choose reputable payday lending companies, including some large publicly traded companies that have good compliance, consumer disclosure and collections practices. Their claim is that they ‘strive to do business with only the most responsible of these lenders.”

When banks refuse to have reasonable lending terms for families and homeowners many have gone to nontraditional financial institutions, such as payday loan companies, for short term personal loans.  In many cases the lending fees are high because of the banks finance fee to the lender. For many, these are the only financial institutions that are easily accessible are check cashers, pawn shops and payday loan centers.

So why deal with “bottom feeders”? Simply put, the banks are under scrutiny from the government and are losing normal streams  of revenue that was enjoyed in the past because of new financial regulations. They have a strong need for new ways to make money and lending to payday lenders is one great resource for banks. Their comments about the industry being so distasteful, and how their appetite is limited in doing business with lenders really is a joke. The payday lending industry has brought them a great avenue for new revenue and they are enjoying it as the payday lending industry continues to move full speed ahead. It cannot be ignored that the payday lending industry is extremely lucrative especially where banks come in. For example, a normal $500 payday loan from the banks would come with an APR of about 287 percent.

‘Kevin Connor of the nonpartisan Public Accountability Initiative found that banks have extended $1.5 billion in credit over the past few years to publicly traded payday loan companies. They estimate available credit to the industry overall is as much as double that when privately held payday loan firms are included.’

Reports estimate that there are over  22,000 payday loan stores nationwide which make $30 billion in loans each year.

The banks borrow from the Federal Reserve at low rates, but last year the banks collected $70 million in interest payments from payday centers during the year of 2009 alone. At best their negative connotations on the industry that is helping sustain them is really all about reputation.

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16
Aug

Cash Advance Loans in Demand in UK

Posted by Al

According to a cash advance resource, cash advance loans are on the rise in the UK. The credit crunch and lack of alternative loans seem to play a role in that.

Payday loans, also known as payday advance, are sometimes referred to as cash advance loans or simply cash advance. Consumers can typically get a cash advance from their banks or credit cards, but doing so can affect and/or lower their credit score.

The way it works is when you get a cash advance from a credit card or your bank, they will report that loan to three credit bureaus (Experian, Equifax, and TransUnion). This costs points in your credit score and you can be flagged as a risky borrower making it harder to receive long term loans such as car loans, home loans, etc.

A less riskier way to take a cash advance loan is to take it from an online direct lender like us. We can provide you with a faxless cash advance loan with no credit check.

You can take this loan to handle your financial emergency and short term needs for fast cash without worrying about your credit.

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29
Jul

Collections industry preparing for financial reform

Posted by Al

In a strange turn of events it seems likely now that even the collections industry will fall under the vast reach of power under the new Bureau of Consumer Financial Protection (BCFP), housed under the Federal Reserve.

Of course this would be yet another example of an industry that is facing new regulation in response to the economic crisis which they did nothing to create, while those responsible were left out of the new bill because it was “too difficult” to deal with at this time.

Those in the collections industry thus far are seemingly disheartened by the over-reaching regulations and quick push to get the bill approved before first understanding the impact on those industries. This is somewhat understandable seeing as collections agencies are already tightly regulated and follow strict laws and outlines defined by the Fair Credit Act, by the Federal Trade Commission. Many in the collections industry are wondering specifically in new regulations could be soon implemented without though or regard to eliminating jobs, as has been demonstrated thus far with the financial reform bill.

ACA International, the association of professional businesses and individuals involved in the credit and collection industry, will reportedly attempt to work closely with the new BCFP in order to hopefully reach a fair balance on any newly imposed regulations.

It seems that other than creating more work for lawyers, the new BCFP will certainly be eliminating thousands of jobs once new regulations are implemented to countless industries. It is very un-nerving to already see them aiming to regulate industries, such as collections, that don’t actually deal with finance at all. I for one hope this does not eliminate jobs in the long run for our friends in the collections industry, who are doing a simple, straightforward, and regulated task of collecting debt on behalf of the lender. What’s next, do we regulate the office supply stores that sell pens to banks and payday lenders?

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21
Jul

President Obama Signs Financial Overhaul

Posted by Al

president Obama financial overhaul

President Obama signs the financial overhaul bill this morning. The bill is aim to protect the consumers in order to avert another financial meltdown such as the one in 2008. This bill was mainly pushed by the presidents and only needed a few republicans votes to pass the congress in order to get to the president’s desk.

While the democrats called this bill a victory, their opponents, the republicans, condemned the bill claiming it will put burden on small banks and small business. “While President Obama pats himself on the back today, families and small businesses are bracing for yet another big-government overreach that will make it harder to create new jobs,” said the House Republican leader, John Boehner of Ohio.

Under this financial overhaul, all lenders, including the payday lenders, will be more closely regulated by the federal government.

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16
Jul

Payday Lenders and Payday Employees Fear For Their Jobs

Posted by Al

Financial reform bill has passed and now CFPB  has been created to create more rules and regulations for the lending industry including the short term loan industry even though this industry had nothing to do with the 2008 recession.

CFPB and many of the politicians have vowed to put all sort of caps and limitations on the short term lending industry which includes the payday industry.

Many payday lenders believe that they are already over regulated by their own States. For example State of Arizona recently banned payday loans that made many payday lenders leave the State that resulted in thousands of good paying jobs being lost. And State of Illinois introduced tighter regulations on payday lender.

“The payday loan industry is already closely regulated ” said Gabe Rodriguez who is a known author in the payday loan community.  He further points that that “States which have allowed regulated payday lending have very few complaints against our industry”.

CFPB will represent the federal government and add a new layer of regulations in additions to those added by the States which is making the payday lenders and their employees very nervous.

According to the “comment of the day” section at Payday Pundit an employee for a small payday loan company said

I work in a payday/small loan company. I am getting so flustered with all of this. Everyday I wait on news that will shut us down or news that they will leave us alone. I feel as if many of us are on pins and needles wondering if soon we will be in the unemployment lines. Job security is gone, and a lot of the zest that I once had is fizzling out.. I am not alone in this.. There is uncertainty in the air..
I sure wish at least we knew what and when these changes would occur..

Getting Discouraged

Payday lenders feel that the financial reform bill is not addressing the root causes of what led the US economy to collapse in 2008. It was well documented that sub-prime mortgages, the major wall street banks irresponsible lending, and the greed of CEOs and CFOs of those banks and financial institutions was what led to the deep recession of 2008. In other words it was the wall street not the main street that was responsible for the 2008 financial collapse.

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15
Jul

Financial Reform Bill Pass Congress: 60-39

Posted by Al

Financial overhaul bill passed the senate vote today with 60 required votes and it’s on its way to President Obama’s desk to be signed. The goal of of the reform bill is to further regulate the financial industry in particular the banks and the lenders including the short term lenders. This bill was passed to regulate the financial industry in order to prevent and avoid another big financial disaster as result of sub-prime mortgage crisis that led US economy to deepest recession after the great depression.

Senate Financial Reform Bill

Some experts claim that this bill will have unintended consequences as banks will may shift business either abroad or pass on their cost to the consumers.

… banking analysts warn the new consumer protections could paradoxically lead to a reduction in banking services for low- and moderate-income people.

And that are evidence for that claim. For example today BOA announced to charge new fees, including online service fees and teller fees, to make up for the loss revenue of over draft fees and other fees that will be capped by this reform bill.

How does it affect the payday industry?
As result of this bill, a new government bureau will be created called Consumer Financial Protection Bureau or CFPB. This bureau will set caps and limitations on interest rates, fees, and amount of loans that can be offered by the lenders including the payday lenders. Payday lenders already feel regulated and scrutinized by the States they are licensed from and they fear that the additional federal regulations limits may hurt their businesses dramatically leaving them to close their doors leaving thousands unemployed.

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09
Jul

More Forms Required for Small Business

Posted by Al

More tax codes, more fees, more paperwork. That is the latest news for small businesses. From one end, we hear the White House wants to create jobs by aiding small business in forms of small business loans and even payroll cuts, but we see actions that are contrary to that which is a massive health care law that requires more paperwork for small business.

Read more this in an article on CNN Money.

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09
Jul

California Banks to Offer Zero Interest Loans to State Workers Who Qualify

Posted by Al

When the republican governor of California, Arnold Schwarzenegger, was elected, he had promised that he would cut State spending and help private business grow and it seems that he was able to do just that but apparently not to benefit of the residents of California but the California’s banks and credit unions.

State of California Seal

According to an article on Bloomberg, Banks and Credit Unions in California will now offer zero interest loans to over 200,000 State employees whose salaries maybe reduced to minimum wage.

“We’re trying to show our support for our state-employee members,” claims Golden 1 Credit Union’s Donna A Bland.

But are they really? Anyone knows that by reducing one person’s employee and offering them loan, even a zero interest one, only means trouble. It keeps them under further debt, takes away their ability of paying back the loan or living paycheck to paycheck, which makes them more vulnerable financially for more loans. And when they run out of 0 interest loans, then they start taking interest based loans and even high interest loans including short term loans such as payday loans.

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07
Jul

Bank of Wal-Mart – Coming Soon To Neighborhood Near You

Posted by Al

So you think Wal-Mart is only a giant retail store that sells just about everything? Think again. According to MyBankTracker, Wal-Mart will be launching a bank in Canada very soon with a Wal-Mart credit card as well as they are a full licensed bank in that country.

Apparently back in 2007 the company tried to get into banking in US but was unable to secure a card processing center in Utah that would handle the store credit card services.

Bad for Banks
If Wal-Mart starts offering financial services directly, they can be a huge threat to US banks specially the small banks and credit unions. Wal-Mart already is into check cashing business that cashes checks for a very small fee cheaper than other paycheck advance stores. Also they have a money card where many people use to take a payday loan. Offering other banking services, in opinion of some, could trigger unfair competition that could put local banks and financial institutions offering the similar services out of business or push them to corner where they have to cut costs and lay people off.

Good for Consumers

If Wal-Mart becomes an actual bank with its own credit cards, as opposed to their current model where they partner up with other financial institutions to do that, then in theory that could costs for consumers as Wal-Mart can offer its products even at lower price. Credit card and debit card fees are very expensive for merchants even the ones as big as Wal-Mart. Also charge backs and fraudulent credit card activity ends up costing retailers the most. By becoming bank Wal-Mart also hopes they can reduce these problems.

That means consumers can buy items for cheaper from Wal-Mart, and perhaps even take loans including payday loans for cheaper. That would cause other banks and lenders to be competitive to offering more affordable solutions to their consumers and at the end consumers will win.

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