Payday Loan Times

News About the Ever Changing Payday Advance Industry

Kansas Bill to Protect Payday Lenders Never Gets Off Ground

Filed under: Kansas — J.J. Cameron at 4:52 pm on Tuesday, February 28, 2006

Senate Bill 376 seemed relatively harmless … to the untrained eye. In reality, this was an attempt to erase existing protections that prevent the most vulnerable borrowers from falling prey to unending cycles of high-interest debt.

“The predatory lending industry is one of the fastest-growing industries in our country,�? said Sen. Chris Steineger, a Wyandotte County Democrat and member of the Senate Financial Institutions and Insurance Committee. “I’m glad to see this bill appears to be dead for the year.�?

Kansas lending laws are tougher than those of some other states, including Missouri. They restrict payday loan companies and other subprime lenders that cater to consumers with tarnished credit from renewing or extending short-term personal loans and charging an extra fee each time.

The practice, known as “flipping,�? chains borrowers to a cycle of revolving debt, as lenders charge higher fees again and again on the same loan.

(Read on …)

Georgian Supports End of Payday Loan Practices

Filed under: Georgia — J.J. Cameron at 3:10 pm on Tuesday, February 28, 2006

Stephen Winslow is a regular contributor to The Augusta Free Press. He recently wrote an article praising the paper for shedding light on the payday loan industry.

Taking advocates of payday loans to ask, Mr. Winslow is probably a supporter of the December closing of a handful of payday advance operations in Georgia. Here are excerpts of what he had to say:

Unfortunately, there are those that are uneducated and continue to buy the popcorn that the industry continues to sell. Tom Lehman, for example, acts as though people involved in the cycle of predatory loans have a choice on whether they take a loan or not. He states that the household should be able to decide how many loans they wish to take.

I would agree if people were able to pay off the loans over a peroid of time that was adaptable to the individual’s financial state. However, thanks to lobbyists and those that do not understand the dynamics involved in this predatory practice, people are forced to roll the loans over because of unfair repay deadlines and an APR of 377 percent or so.

(Editor’s note: interest rates on payday loans vary and states have been introducing regulations to cap them).

Next, Howard Karger has the audacity to suggest that taking a payday predatory loan is like a middle-class family putting something on a credit card. If I put something on my credit card, I have a minimum payment I must make, and the time it takes me to pay the card back can be extensive as long as I make that minimum payment. If I wish to pay it back early, I should; however, if I need to take my time, I can. That option does not exist, never has, and greed will never allow the payday predatory industry to ever offer it.

Do you really think that people, if they had a payback option that suited their financial situation, would continue to take these loans? Do people like Mr. Lehman and Mr. Karger believe that this is some type of a hobby for families?

Of course not, and payday preditors know it. The industry cannot survive without the repeat customer, period. The industry knows this as well, and that is why they prescribe to the rules that currently exist, because they realize that they themselves create their own market.

Newspaper Editorial Urges More Oregon Cities to Act Against Payday Cash Loans

Filed under: Oregon — Desmond Carlisle at 5:05 pm on Monday, February 27, 2006

Eugene, Springfield and other cities in Oregon should follow the lead of the city of Portland in regulating payday loans, urges an editorial in the Eugene Register-Guard.

The newspaper calls on state and county governments to control the industry, saying that it is not a municipal responsibility. But House Republican leaders killed a bill last year that would have reduced the interest rates that lenders charge and made other important changes.

Last Wednesday, the Portland City Council approved an ordinance that partially fills the void left by the state government. There are no strict regulations on Oregon payday loan companies statewide, one of the few states that can make such a dubious claim. City officials in the localities of Gresham and Troutdale are expected to vote on similar meaures next month.

The paper urges Eugene, Springfield and other communities to protect the many Oregonians who are charged excessive APRs (annual percentage rates) for their cash loans.

(Read on …)

Advance America Confident About Future of Its Cash Advances

Filed under: Arkansas, Pennsylvania — J.J. Cameron at 3:09 pm on Monday, February 27, 2006

It hasn't been the best week for Advance America.

Recent reports state that the company may have discontinue operations in Pennsylvania and Arkansas, but representatives - along with industry insiders - do not regard these as not signs of trouble elsewhere.

Advance America currently operates 2,604 centers in 36 states. In the two aforementioned states, the service operates under an "agency model," partnering with federally chartered banks to offer payday loans. There are a total of 131 stores in the two states.

In its fourth quarter earnings statements released earlier this week, Advance America disclosed that the Federal Deposit Insurance Corp. "has instructed certain banks to discontinue offering payday cash advances and alternative credit products if they cannot adequately address the FDIC's concerns regarding those products."

Jamie Fulmer, Advance America's director of investor relations told the Spartanburg Herald-Journal that it's too early to say how the FDIC news will play out.

"We're evaluating what options might be available to us should they (federally chartered banks) be forced to discontinue payday loans and installment loans in those states. … It's hard to say what those options might be."

(Read on …)

Tucson City Council Ponders Payday Loan Ordinance; Stores Would Be Spread Out

Filed under: Arizona — Desmond Carlisle at 2:24 pm on Monday, February 27, 2006

New Payday Loan Restrictions in Arizona...Payday loan companies may be limited by new restrictions Tuesday as the Tucson, Az., City Council deliberates their fate, according to the Arizona Daily Star.

The council is considering limiting the areas where payday advance stores can open up by requiring a quarter-mile of separation between each site and a buffer of 500 feet between the sites and certain neighborhoods.

Karen Masbruch, the Assistant City Manager, said the ordinance is on the table in an effort to ensure that payday cash loan agencies are not clustered in certain areas of the city. There are currently more than 60 payday cash advance businesses within Tucson city limits, largely concentrated on the South and West sides. Groups of the stores can be found along South Sixth Avenue and Ajo Way, along North Oracle and Grant Road and at East 22nd Street and South Craycroft Road, near Davis-Monthan Air Force Base.

Council members want to protect residents from what they believe are exploitative cash loan lending practices that charge high interest rates and assess stiff fees and penalties to clients who cannot pay. Because the restrictions will effectually limit the facilities' competition, the payday industry has not mounted a legal challenge to the proposed ordinance.

The council's recommended change is based upon others implemented in Pima County recently. Last year South Tucson became the first local jurisdiction in Pima County to pass payday loan restrictions. Phoenix has mounted a similar effort. While the many Arizona payday loan companies will continue operating in the state through at least 2010, minor restrictions imposed by local governments are becoming par for the course.

Advance America to Close Payday Loan Offices

Filed under: Arkansas, Pennsylvania — J.J. Cameron at 4:02 pm on Sunday, February 26, 2006

Due to a federal banking investigation, Advance America may be forced to alter its payday loan practices in Arkansas and Pennsylvania.

Advance America Offers Payday Loans Company president Ken Compton said in a conference call last week with reporters and analysts that the Federal Deposit Insurance Corporation is looking at payday advance operations at banks it supervises.

Advance America and other similar lenders originate short-term, high-interest loans financed by regular banks. The companies also earn fees for collecting payments and dealing with late payers. Because the FDIC insures bank deposits, agency officials have said they think the business is too risky for their banks. The quick cash loan issue probably won't go away any time soon.

New Mexico Governor Adamant About Payday Advance Lending Legislation

Filed under: New Mexico — J.J. Cameron at 3:54 pm on Friday, February 24, 2006

Gov. Bill Richardson isn't pleased. He says his administration will tackle what the Legislature declined to do during its just completed session: regulate payday lending.

Richardson has directed the state Regulation and Licensing Department to issue rules that will do much of what had been proposed in a bill that died when the legislature adjourned last week.

The regulations will establish caps on fees as well as limit the number of cash loan renewals and rollovers of payday loans.

In addition, The Albuqerue Tribune reported that the administration is imposing a moratorium on new licenses for payday lenders.

Critics contend payday lenders target the poor and that consumers can become trapped with debts because of the high-cost loans. The governor's regulatory attempt is separate from proposed rules developed by Attorney General Patricia Madrid to cap interest rates on payday loans and impose other restrictions on lending practices. However, lenders have filed lawsuits challenging the regulations by the attorney general.

(Read on …)

Portland Puts Restrictions on Payday Loans

Filed under: Oregon — J.J. Cameron at 3:42 pm on Friday, February 24, 2006

Portland City Commissioners passed the first ordinance in the state this week to protect consumers from some of the lending practices of payday loan businesses. This comes on the heels of recent state legislature criticism on the matter.

A no faxing payday loan can allow people with bad credit to deal with unexpected bills. But a lack of regulation means interest rates on some loans can be astronomical.

Mayor Tom Potter says that, while Portland City cannot cap interest rates, the new ordinance gives consumers 24 hours to cancel a loan, as well as the right to pay down principle and make installment payments.

"I think when you charge 912.5 percent interest annually, that's unconscionable," Potter said. "And I think that our society has to wake up and realize that there are some things that are just unacceptable. And this is one of those things."

Gresham, Troutdale and Eugene are considering similar ordinances - but Oregon remains one of only seven states with no interest rate limit on instant payday loans.

Advance America Posts 7.1 Percent Revenue Growth; Net Income Down Slightly From 2004

Filed under: National, South Carolina — Desmond Carlisle at 11:23 am on Thursday, February 23, 2006

Advance America posted strong revenue growth last year while also seeing its net income decline, according to the Spartanburg Herald-Journal.

The Spartanburg, S.C.-based payday loan company reported that it ended 2005 with net revenues of $515 million, up 7.1 percent from 2004. The company earned revenues of $131 million in the fourth quarter, up 0.8 percent from the previous year. Its net income for the year was $63 million, down 3.5 percent from 2004's income of $65.3 million.

Advance America CFO John Hill said revenues were up primarily because of the 361 new stores that opened in 2005. On the flip side, several factors — a forced exit from the North Carolina payday loan market, Hurricanes Katrina and Rita, and new federal banking regulations — had a negative effect on the company's bottom line.

"Without all that stuff, our growth would have been significantly higher," Hill said. "We estimate we lost about $3 million worth of revenue, primarily in Louisiana and Mississippi."

Katrina and Rita caused 128 temporary closings for the company, 13 of which remain closed. Advance America lost revenue during the temporary closures, then lost more because there were no customers to the stores that remained open. Then, in December, the company closed all 117 of its North Carolina stores in compliance with an order from that state's banking commissioner.

The Federal Deposit Insurance Corp. issued new guidance that led Advance America to adopt a different business model in North Carolina, Texas, Michigan, Arkansas and Pennsylvania. In those states, Advance America has switched to offering installment loans, which are easier for borrowers to pay back, and not as profitable as the regular payday advances issued by the agency.

First Bank of Delaware Puts End to Payday Loans

Filed under: Delaware — J.J. Cameron at 11:14 am on Thursday, February 23, 2006

Under pressure from federal regulators, First Bank of Delaware plans to end its involvement with with payday loans and cash advances.

The announcement by the Brandywine Hundred-based bank follows a similar move late last year by Rehoboth Beach-based County Bank. Both banks made the loans available through partner companies that operate storefront locations nationwide.

In a brief statement released late Tuesday, First Bank of Delaware acknowledged that the Federal Deposit Insurance Corp. had ordered the bank to stop its payday-lending involvement, unless the bank could fix unspecified problems with oversight of the lending. As a result of the regulatory pressure, the bank said it has decided to stop payday lending “in a time period that has yet to be determined.�?

(Read on …)

Next Page »