No more payday loans for Virginians
Check ‘n Go, the second-largest payday lending company in Virginia, says it might no longer offer loans in the state. Stiff regulations have caused the company to struggle in Virginia.
State legislators extended loan terms and capped fees to a point that the company might not be able to make enough money to pay its employees and bills.
No loans for now
For now, Check ‘n Go is offering no new loans in Virginia until it decides on an action plan. The company has 25 locations in the state.
“At this juncture, we’re looking at our options in the state of Virginia,” said Check ‘n Go spokesman Jeff Kursman.
Just doesn’t add up
Payday lenders are allowed to charge $15 per $100 loaned. That $15 must pay for rent, technology and salaries. Kursman says the lender is really only making about a $2 profit on each loan, and now that borrowers have a month to pay loans back, that’s just not enough to stay viable.
“By the time you get done, the net revenue on a $100 loan, when you’re charging $15, is less than $2. It’s about 6 percent,” Kursman said. “So when you suddenly double the amount of time that an individual has to pay that back, it significantly hampers the ability of those locations to be profitable.”
A few more factors
While the payday loans companies are quick to blame the legislation for their possible demise, they admit that unemployment took a toll, as well.
The legislators say that it could be a matter of competition. Check ‘n Go is the second-largest payday lender in Virginia after Check Into Cash.
With this rate, it would be impossible to make a good profit. They have doubled up the length of time a borrower has before repaying a loan, plus have cut down the fees in half (or less); you can see why the company is struggling financially. This is clearly not a matter of competition.
I will never understand how any governmental entity can claim that it is business friendly when it passes laws that make product or service (that isn’t already illegal for good reason) that has a legitimate demand more or less untenable to run, and impossible to turn a profit. Also, Check N Go is one of the largest payday lenders in the country – that loss of revenue and also employment is going to do more harm than good.
$2.00 in profit? Totally untrue. I worked for this company for many years and they made a lot more in profit than $2.00 per loan.
Payday Lenders ARE predatory lenders. They claim to be offering a service but in reality they take money from those who least can afford the high fees charged. Most peole get caught in a trap they cannot get out of. They are forced to re loan every payday and usually have to take out miltiple loans to stay afloat.
Yes, the customer are partly at fault. But payday lenders are as well. They know the majority of their customer are repeat.