Expert Explains
John Rockefeller

Cash advance lenders do not make huge gains

The way payday loan and cash advance lenders are talked about, people may think they sit atop piles of cash. Contrary to popular belief, short term loan lenders aren’t the extortion artists many believe they are. In fact, the typical payday loan lender doesn’t make a lot from loans. The profit margins are pretty slim.
A demotivational poster for unemployment. An Imperial storm trooper from “Star Wars” sits alone on the subway. The caption reads: “Unemployment: Sucks when your job gets blowed up,” referring to the destruction of the Death Star.

Killing payday lending does not fight poverty

Jobs fight poverty. Gainful employment grants motivated, enterprising consumers with the means to provide. Yet groups like the Anti-Poverty Coalition of Greater Dallas seem to have missed the memo, suggests the Payday Pundit. The Dallas Observer reports that the Dallas coalition is working hard to shut down personal loan and installment loan companies in Texas,
Image of visitors in the hedge maze at Longleat Safari Park near Horningsham, Wiltshire, Great Britain.

Understanding what payday loan APR is – and is not

A payday loan is a simple product that fills a specific financial niche for consumers who need quick cash but find themselves unable to obtain it via a traditional bank. Payday loans typically come to term after two weeks, and payment plus convenience fee is due at that time – usually on the consumer’s next
Payday loan storefront

Study blames crime rates on payday loan lenders

A newly released study links payday loans to rising crime rates and falling property values. It isn’t the first time that the two things have been connected, but the literature on payday lending has varied between a link existing and not existing. The sum total of the effects of payday lenders may be impossible to
A woman wearing a dress made of gold coins. That's exorbitant and unreasonable, at least in most people's minds. Payday lending is neither of those things, as you'll see.

Usury and payday loans: An unreasonable comparison

Payday lending has been criticized on numerous grounds by a variety of sources, but inevitably these criticisms tend to point back toward a single source: usury. Lending and the charging of interest – even the concept of “exorbitant or unlawful rate of interest,” as a Google search defines usury – very likely predate the creation
Payday Lending Statistics

Report sheds light on controversial lending industry

Payday lending is a hot-button issue. Consumer Focus released a study saying the number of payday loans borrowed in the United Kingdom has quadrupled in the last four years. Montana’s I-164 initiative seeks to limit payday lending, and Arizona’s “Operation Sunset” ended all payday lending within the state on June 30. Federally, S.3245, the Payday
Bull riding

Online loans are risky for lenders

A lot of people have the idea that lenders of online loans can get away with just about anything. The offices for any online personal loan or installment loan could be anywhere, so people get the impression they can’t be tracked down. However, online loan lenders actually have to be far more careful than the
Coal mining

Payday advance lenders compete for price when allowed

Some people have the idea that the payday advance industry does not compete for prices. In fact, many suspect lenders collaborate to keep prices and profits high at the expense of consumers. This case has been argued, citing the near uniformity of the price of the typical payday advance. However, those who make these claims
A woman peering through a magnifying glass, happy to have discovered something. Perhaps if the Lansing State Journal had used a magnifying glass when writing their recent payday loan scare piece, they'd see that they are missing lots of evidence.

Lansing Journal article shortchanges payday loan facts

In the financial news industry, the media will periodically run an anti-payday loan story in which the same talking points are used. In the case of a recent Lansing State Journal article entitled “Going with payday loans might not be worth fees,” those talking points include 391 percent annual interest and varying levels of state
A facial close-up of an African-American woman looking through a spyglass.

The surprise audit: due diligence for a payday loan business

Much has been alleged by payday loan opponents regarding the so-called exploitative nature of the products payday loan stores have to offer. That is a diatribe-style argument that will rage on with certain activists, regardless of data pointing toward the contrary. However, here’s something that the best payday loan business organizations do that not only
Dust Bowl

Payday loan borrowers defy stereotypes

The actual people that are payday loan borrowers are not who some claim them to be. Payday loan lenders are thought to target the most desperate and poor. Cash advance lenders are also said to concentrate in areas that are more densely populated by minorities. Like most stereotypes, the larger picture is actually a little
a pile of bills

A balanced look at payday loan interest and free market principle

Interest rates are the issue that payday loan opponents rely on most often. Anti-payday loan activists compare interest rates on payday loans with the interest rates for other financial products such as auto loans or home mortgages. Payday loan opponents make these comparisons because it’s the easiest way for them to support their arguments. The
Tiger

A cash advance is not a tool of racism

Critics of the cash advance industry have tried to say that lenders exploit minorities. The idea goes that minorities in poor neighborhoods are preyed upon by short term loan lenders to get them hooked. The truth is not that simple. A payday loan store goes where demand is highest. There isn’t a business on earth
Twenty dollar bill

Payday loans are cheaper than the alternatives

There have been claims that payday loans come with too high a price. However, payday loans are actually cheaper than the alternatives. For instance, a payday loan can be far cheaper than paying the minimum payment on credit cards. A cash advance on a credit card can build a lot of interest over time. A
A black-and-white photo of a key in a door lock.

Avoid payday loan default with an extended payment plan

Despite planning and the best of intentions, sometimes people find themselves unable to repay their payday loans when they come due. That’s why payday lenders that are members of the Community Financial Services Association of America (CFSA) offer an Extended Payment Plan (EPP). These types of installment loans enable consumers to repay their loans over
Watch Calculator

Claims of high interest from payday lenders involve bad math

One of the claims you hear about payday lenders is that the APR charged for payday loans is more than 100 percent per year. Granted, there is a kernel of truth to it, but only if you happen to take one particular view. The supposed high interest is among the reasons that the financial reform
A smiling blonde woman holds a saved dollar. Payday loan alternatives should help you save, not cost more. Are you listening, USA Today?

USA Today payday loan alternatives article is misleading

Opponents of payday lending tend to argue that there are cheaper payday loan alternatives available. Their argument may apply to consumers with sufficient credit to grant the financial flexibility needed to obtain cheaper short term loans, but for consumers operating under great credit constraints, payday lending is a more practical option. Unfortunately, a great deal