Posts Tagged ‘payday lenders’


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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Announcing our Payday Affiliate Program

Posted by Al

We would like to announce now we have a payday loan affiliate program that will help you benefit. If you have website with considerable amount f visitors, chances are there maybe some of your visitors who need money now and looking for an easy way to get cash advance online.

We are among one of the few payday lenders with this program and if you would like to join our network and help your visitors with easy to get payday loans, simply contact us.

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Payday Lenders Unfairly Targeted by New Reform Bill

Posted by Al

Proposed financial reform bills currently in congress may result in creation of a new agency called CFPA intended to regulate the financial industry to prevent a similar financial meltdown that had resulted in the economic crisis of 2008. However, these bills may be unfairly targeting businesses and hampering their contribution to the economy.

payday loan industry and direct payday lenders. Some argue that payday advance lenders were one of the few financial institutions that contributed positively to the economy by allowing cash flow to the average working family.

“Payday advance loans are the easiest and fastest loans to obtain especially during these hard times, but of course they come with a price.” said Richard Hwang director of finance at a “Our short term loans helped many borrowers get money on demand and avoiding unnecessary overdraft fees and other type of late fees.”

It is true that a payday advance loans can be expensive in terms of fees and interest rates but that is because they are considered high risk loans with higher default rates. Many payday advance lenders are reporting millions of dollars will be lost this year because 20 – 40% of borrowers will default on their payments.

Responsible Payday Lenders
Many direct payday lenders have been adopting responsible lending practices while informing and educating their customers about payday loan risks. For example, advises customers that payday loans are to be taken for emergencies only and customers with more than two open loans should not and would not be able to qualify for any future loans until the number of loans drop. Many other direct payday lenders have also similar rules and policies in place to both protect both the customer’s and lenders best interests. Yet despite all these self regulations, payday lenders could be over-regulated by a new financial reform bill governed by the CFPA. This could result negatively; stifling payday lending puts a roadblock on consumer financing as well as the economy.

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Alternatives to Traditional Bank Loans

Posted by admin

The credit crunch has made it very tough to borrow from traditional banks. So what alternatives are there? Below are two alternatives, one for businesses and the other for individuals.

Purchase Order Financing

A common problem for businesses is that while they are using their resources to fulfill purchase orders, customers are not paying their invoices, putting a strain on the business’ cash flow. A purchase order financing can help. A purchase order finance is a short term loan to the business that entails funding the business with an initial amount to help them finish their order in exchange for payment when the business has received payment and shipped the order.
The benefits of a purchase order finance is that businesses can get cash flow fairly quickly, however, the annual percentage can be past the 40s.

Payday Loans

An alternative for a smaller short term cash flow is a payday loan. Payday loans are granted to borrowers and due during the borrower’s next pay date, usually falling between 7 and 30 days away. Payday lenders usually look for borrowers who have a steady job and an active checking account.

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