Evidently, military payday loans have pulled off a feat most issues don't even come close to accomplishing:

They've made Republicans and Democrats agree!

A bipartisan coalition of lawmakers on Thursday backed legislation limiting instant payday loans made to troops and vowed they’ll fight to keep the language in next year’s defense budget.

“This has become a readiness problem,” said Sen. Jim Talent, R-Mo. “They’re targeting younger troops. Our fine young men and women are dedicated and great warriors, but many are not sophisticated in finances. This becomes a distraction from their mission.”

Of course, representatives from the payday advance lending industry don't agree. They said they aren’t targeting military bases and do provide an important service. They still expect Congress will ultimately kill the proposed limits.

Critics of faxless online payday loans have complained that lenders often entice troops and their families with the allure of short-term cash without fully explaining their fee structure, with charges that equate to a 400 percent or higher annual interest rate. Last month the Defense Department agreed, releasing a report labeling the instant loan industry a “predatory problem” and backing the rate caps.

(more…)

While the Pentagon is joined by consumer groups in its battle to limit military payday loans, providers of such cash advances are banding together.

Those that give out payday loans online for a living are mounting their own campaign against the interest rate cap, attached to the Senate’s defense authorization measure by Jim Talent (R-Mo.) and Bill Nelson (D-Fla.).

If Congress limits military payday loans to a 36 percent annual rate, the industry says it would not be able to cover expenses, adding that a market that can prove helpful to cash-strapped service members would dry up.

Focus on payday loans: The Center for Responsible Lending, the lobbying arm of community development lender Self-Help, has shifted its focus for this fall away from a legislative crackdown on predatory mortgage lending, which is not expected to move until next year, and onto the Talent-Nelson no faxing payday loan amendment.

Center president Michael Calhoun touted a Department of Defense (DoD) report last month that found payday lenders clustering around military bases to target service members and endorsed a 36 percent rate cap. He said the DoD has taken the lead in lobbying lawmakers for payday advance caps, setting up frequent Hill visits and allowing the Center to provide backup.

“It’s the right policy and right politics for folks to be supporting troops and supporting DoD,” he said. “This is not us pushing [the DoD]. We quite frankly have been surprised at how strong they have been.”

(more…)

In the last few weeks, the Pentagon has stepped up its critiques of military payday loans. Recently, the Department of Defense issues a report to Congress on the supposed negative impact of such cash advances.

However, a leading regular and faxless payday loan lending industry organization takes exception to the report.

The report “is nothing but a re-hash of flawed data, biased analysis and anti-business philosophy pushed by fringe activists,” says a press release issued Thursday by the Community Financial Services Association of America, a national trade association representing payday advance lenders.

“Fringe activists” worked so closely with the Pentagon, CFSA claims, that one group posted the report on its Web site before the report went to Congress.

According to the Pentagon report, between 1999 and 2005, the number of quick payday loan shops in the country nearly tripled, going from 8,000 to 23,000.

“The allegation that payday lenders target members of the military is simply false,” said Darrin Andersen, president of CFSA. “In fact, their own report shows that less than 1.3 percent of total industry revenue comes from military customers.”

It's something to consider.

Andersen, noting that CFSA represents “responsible payday lenders,” said he condemned the abusive practices of some payday advance companies “and any other type of lender who mistreats their customers, especially service men and women who defend our country.”

(more…)

For one payday advance company, being charitable appears to be paying off. 

ACE Cash Express, which has distributed helped promote financial literacy across Texas, announced fiscal 2006 net income of $25.0 million and earnings per share of $1.76 per share yesterday, compared to fiscal 2005 net income of $27.4 million and $1.98 per share.

As you can see, the regular cash advance and online payday loan company saw its stock price rise a bit.
Things to consider are: Net income for fiscal 2006 includes a net after- tax charge of $0.7 million related to losses from Hurricane Katrina; and an after-tax write-off of $0.5 million related to the quick cash loan company's decision to discontinue operating self-service machines in H&R Block locations.

Additionally, net income for fiscal 2005 includes a one-time after-tax charge of approximately $0.6 million related to a cumulative change to the Company's lease accounting practices.

During fiscal 2006, the providers of no faxing payday loans opened 51 newly constructed ACE Cash Express stores, acquired 135 more and sold 2 stores to ACE franchises. ACE franchisees also opened 32 stores.

There may be controversy swirling over whether or not a no fax payday loan is helpful for those in debt - but there's no longer debate over how well companies that specialize in this sort of resource do on the stock market.

As Motley Fool Inside Value chief analyst, Philip Durell knows a lot about the industry. His job is to help people choose stocks. With this in mind, Durell focuses on national payday advance lender Advance America as one of his two recommendations last October, noting the controversial nature of the cash loan business as one of the risks inherent in an investment.

However, the company has advanced more than 11% since that time, compared to a 7% increase by the market. Moreover, the whole sector has been one marked for growth since April, rising on average nearly 75% over a six-month period, despite the regulatory hurdles it faces.

Slight payday advance decline. The instant payday loan stock market appears to have gone flat recently, though, rising only a little more than 1%, with Dollar Financial leading the pack. In fact, First Cash HAD been the big loser, falling more than 7% over that time frame. Now, though?

The payday loan company jumped more than 8% on the news that it had bought a car dealership. We reported on this yesterday. Financing vehicle sales to the subprime market is actually a logical extension of the pawnshop/payday advance lending business in which First Cash excels.

Also, with the FDIC and various states clamping down on certain aspects of the faxless payday loan lending, the car dealerships are seen as a necessary diversification. First Cash plans on opening another three to five dealerships by the end of 2007.

Even in the challenging economic climate in which payday loan providers find themselves, they are still seeing profit potential rise. First Cash noted in its Auto Master acquisition that it should be able to garner a larger share of the market through better-coordinated advertising and inventory selection. It believes the acquisition will increase earnings in the fourth quarter.

Now, EZ Corp has also raised guidance to $1.90 per share as its third-quarter revenues, which ended June 30, rose 31% over last year. Cash America, another cash advance lender, said profits in its second quarter (which also ended in June) increased 58% from a year ago.

The most recent report on income levels across the U.S. doesn't bode well for consumers. While regular and/or faxless payday loan use was not blamed for sending people into poverty, critics of the industry are still keeping a close eye.

The Census Bureau reported Tuesday that the median household income was $46,300, a slight increase from 2004. However, the number of people without health insurance increased to 46.6 million in 2005.

Delving deeper intot he numbers, about 37 million Americans were living under the poverty line last year - about 12.6% of the population. The rate dipped slightly from 12.7% a year earlier, though the Census Bureau said the change is statistically insignificant. It's the first year such a figure hasn't increased since before President Bush took office.

The last decline in the poverty rate was in 2000, during the Clinton administration, when it dropped to 11.3%. Since then, the use of no faxing payday loans has taken off, an indicator that unsecured debt was becoming more of a national problem.

The report comes four years into an uneven economic recovery - and a little more than two months before congressional midterm elections that will determine whether Republicans continue to control the House and the Senate.

As previously discussed here, regulations on payday loans are an issue of debate in at least on race.

Due to high gas prices and a slowing economy, monetary questions are at the heart of many impending elections. Overall, the poverty rate - the percentage of people living below poverty - helps shape the debate on the health of the nation's economy.

Some believe that a proliferation of personal loans has led to the current, bleak situation; while others can see ways in which cash advances come in handy for the poor.

Despite regulations on payday loans in numerous states across the country, a handful of payday advance companies are watching stock shares soar.

One reason why? They're expanding their business models.

For some, this simply includes taking successful payday loan technology and techniques to markets overseas. For others, such as First Cash Financial Services, it means changing gears a bit into a wholly new world; in this case, that of used cars.

The Arlington, Texas, company, which provides short-term, high-interest quick cash loans to people who otherwise couldn't get credit, paid $34 million for Auto Master, a privately held Arkansas car dealer with eight "buy here/pay here" locations in Arkansas, Missouri and Oklahoma.

Auto Master is expected to boost First Cash's earnings by the fourth quarter, prompting the company to revise its 2006 earnings estimates higher to 96 cents to 97 cents a share from earlier guidance of 94 cents to 95 cents.

Auto Master uses a similar model as First Cash, which has rolled up small operations to grow to about 380 stores that offer short-term paycheck advances, check-cashing and other credit services. It also has a 50% share of Cash & Go Ltd., a joint venture that owns and operates 40 check-cashing and financial-services kiosks located inside convenience stores.

"We believe that projected population growth trends in the South and Southwest, especially among 'unbanked' or 'under-banked' consumers, should continue to create long-term demand for affordable used vehicles and financing, as well as opportunities for expansion into other markets where First Cash operates," First Cash Chief Executive Rick Wessel said.

Payday loan stock analysis: Any company offering financial services to the lower end of the income spectrum will see plenty of demand in an era of $3 a gallon gas prices, rising mortgage rates and higher housing costs, but investors have already bought into that story pretty heavily, and sold off just as strongly.

First Cash and competitors such as Cash America, EZCorp., and Dollar Financial had sizable run-ups in the first half of the year and subsequently sold off as investors figured valuations had peaked, says Dan Fannon, an analyst at Jefferies & Co.

(more…)

The movement to regulate military payday loans may be taking place in Washington, D.C., but that hasn't stopped its affects from being felt in California.

As The Daily Breeze reports, those involved in the battle area. Appealing to the Legislature's wartime patriotism and sympathy for soldiers trapped in a cycle of debt. They have help from Torrance Assemblyman Ted Lieu.

Lieu is pushing legislation to protect military families from being preyed upon by these allegedly cheap payday loan companies that often charge more than 400 percent annual interest.

"The military doesn't often come to the state Capitol to ask for help. They are doing that now in a time of war and I ask that we give them that help," said Lieu, a Democrat and former Air Force attorney who remains on reserve duty.

While Governor Arnold Schwarzenegger has not taken a position on the Assembly Bill 1965, spokesman Bill Maile said "the governor strongly supports efforts to increase protections for military personnel against predatory lenders."

We all do. Here's what the proposted bill would include:

• A 36 percent cap on the interest rate at of a military payday loan.

• A ban on ALL payday loan companies from using military insignias in advertising and from implying in advertising that they are endorsed by the armed forces.

• The prohibition of interest from accumulating when military personnel are deployed overseas, such as in Iraq or Afghanistan.

• The borrower also would have 30 days to start repaying the regular or faxless payday loan after returning to a U.S. base.

As the Department of Defense and the Pentagon take aim at this issue, hope is strong for the payday advance bill to pass.

QC Holdings, Inc., a major payday loan company in the U.S., had announced its Board of Directors has increased the authorization limit of the company's common stock repurchase program to $30 million. The program would have otherwise been completed upon reaching $20 million.

During August 2006, the quick and online payday loan firm has repurchased 850,000 shares of its common stock, for approximately $10.3 million. With these transactions, the company has repurchased approximately 1.6 million shares at an aggregate price of $19.8 million overall.

QC Holdings is based in Overland Park, Kansas. It's a leading provider of bad credit payday loans in the United States, operating 558 stores in 25 states at August 23, 2006.

Let's see … the Pentagon recently cited examples of how military payday loans can be dangerous resources for the armed forces. And now?

The Defense Department is chiming it. It says the number of soldiers denied a security clearance over the past five years has increased 1,600% - because so many are having problems with these high-interest, short-term faxless payday loans. Pentagon spokesman Lieutenant Colonel Mark Ballasteros says military personnel are being targeted.

"These types of institutions are prevalent around military installations. They tend to seek out young service members who are inexperienced in the world of credit, but have access to a steady flow of cash," he said.

The Senate passed an amendment in June that would establish a 36% interest rate cap for military borrowers; the bill is awaiting approval in conference committee.

The Defense Department said although Oregon tightened its laws on savings account payday loans, the lenders have found loopholes to avoid the new restrictions. This is a problem that still needs to be addressed, Oregon Public Broadcasting recently stated.