Author Archives: Sara Miller

The Cash Advance Loans Industry – Overview

Payday loans are short term loans that are unsecured and are also referred to as payday advances or small dollar loans. Payday loan services first emerged in the United States in early 1990s and since then started on a growth climb due to a number of reasons. The financial service changes occurring in the marketplace at that time and the fact that there was a very powerful demand by consumers helped the trend.

The changes that took place in the financial service market and went on to become the basis for the growing trend of payday loans are:

  • The high rise in the costs of overdraft protection fees, bounced checks, penalties that were put on late payments, and other such extensions of credit relating to short term borrowings.
  • The continual trend of regulations relating to the service of payday advances that helped in the protection of consumers.

The Cash Loan Industry Analysis

These days, payday loans are utilized for short-term borrowing needs in different communities all over America. An analysis of the industry has lead to the estimation that all over the United States, there are 20,600 payday loan locations that extend around $38.5 billion in credit relating to short term loans. These loans are utilized by working class citizens in 10 million houses who go through cash flow shortages.

cash advance and payday loan industry analysis

The payday advance industry also significantly contributes to the American and state economies who employ a number of more than 50,000 U.S. citizens earning wages of $2 billion. This further leads to a generation of $2.6 billion and more in local, state, and federal taxes.

Because of the expansion and growth of the payday industry, Community Financial Services Association of America (CFSA) was founded so that the long run success of the industry could be ensured. More than half of the payday industry is represented by the member companies of CFSA.

There are some more quick facts about the payday loan industry and its lenders and borrowers that you can obtain by clicking here.
IBIS World can provide you with information on the payday loan industry trends and statistics, along with the market size and analysis in their market research report.

Latest Payday Loans Industry  News

The payday loan industry worth $46 billion is about to suffer a major blow because new and improved payday lending regulations have been implemented by the Consumer Financial Protection Bureau. In accordance with what was mentioned in the New York Times, these new regulations are put in motion so that the lending procedures can start becoming more transparent for fair transactions.

The regulations have been put in effect because some of the payday lenders don’t play by the rules and charge interest rates in triple digits even on small loan amounts like $400. A few reasons as to why payday lenders are so difficult is because of the following:

Some States Are Still Free To Set Their Own Interest Rates

Only a small number of 15 states cap the rates of interest that are charged by payday lenders, which means that a larger number of states are at liberty to charge interest rates that can go up to a massive 300% to 400%. The State Payday Loan Regulation and Usage Rates by Pew briefly highlight the payday lending laws of each state along with a mention of their usage rates.

Payday Loan Regulation and Usage Rates

They Use the Internet as a Helping Hand

All thanks to the internet, online payday lenders are receiving income on a doubled basis since the year 2006, going from $1.5 billion to a huge $4 billion. By offering lending services online, the lenders can get past the tough lending laws and regulations in New York for example. These clever ways are being utilized by various lenders as an escape route from getting caught in the act of using unfair means for the purpose of payday lending.

Protecting Yourself from These Harsh Payday Lenders

If you fall victim to being harassed by these payday lenders, what you should do is immediately contact either the CFPB, or the attorney general’s office pertaining to the state you live in. They will provide you with the help you need.

Consumers require credit that can help them out instead of further harming them, and hopefully the new regulations will be a bit helpful in achieving this goal.

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New Cash Advance Regulation Is On The Way?

payday advance regulations to reduce the debt trapThe payday lending industry is huge, and by that we mean it is worth $46 billion. As the major stakeholders in this industry, lenders make massive profits by charging sky high interest rates of 300% and more – a practice that has led to the accumulation of debt traps. But the time has now come for these lenders to keep their eyes peeled as the industry is being targeted by the Consumer Financial Protection Bureau (CFPB).

CFPB has released a proposal that includes new payday advance regulations to reduce the debt trap and also to help borrowers from falling prey to the clutches of these lenders. These rules and regulations are also applicable to advance-deposit products like short term loans that are offered by some of the banks and car title loans.

As said by Richard Cordray, the Director of CFPB, these new regulations will form the basis for ensuring the protection of consumers who can borrow credit that will help them instead of harming them by surrounding them with endless debt. He further added that this is a significant step towards putting an end to the plague of debt traps that have affected the lives of millions of consumers all over America.

But this shouldn’t call for too much of immediate excitement because there is still a long time for these new and improved regulations to be implemented. CFPB first needs to consult a Small Business Panel that is co-run by the Small Business Administration. This consultation will give lenders an opportunity to weigh themselves in and this process can take a few months as they are bound to raise arguments.

A nonprofit research group called the Center for Responsive Politics, keeps a track on money in politics, and said that since the year 1998, the payday lending industry has elevated their spending by 19 fold from $230,000 each year to $4.5 million.

Advance America, among USA’s largest non bank cash advance providers stepped in to join in CFPB’s efforts and the spokesperson for the company, Jamie Fulmer, while giving a statement said that the new regulations are ideal in setting out to eliminate short term loan products and small dollar.

Basically, CFPB’s new rules will not actually eradicate payday loans but will make them less detrimental. Mentioned below are some of the major issues with payday loans and steps planned out by CFPB to fix them:

Cash Advances Have Low Entry Barriers

Borrowers only have to prove that they have a checking account and a job in order to qualify for a payday loan, and title loan borrowers only need a vehicle to qualify. So when borrowers need cash, it is simple to get it from these lenders.

Solution: CFPB is planning to get lenders to toughen lending standards by having to verify the income, borrowing history and the existing debts before approving loan candidates. This will make it difficult for borrowers to take large loans that they find difficult to pay back.

Lenders Create Everlasting Debt Traps

Payday lenders charge outrageous fees and make truckloads of money. When borrowers are unable to pay back loans within 14 days, they take more loans to pay their existing debt and lenders extend them for an even greater fee. CFPB said that 8% of payday borrowers end up rolling over their loans and a Pew Charitable Trusts report found that fees worth $1,200 is taken on an original loan of $1,000 is taken from title loan borrowers.

Solution: CFPB is trying to find a solution for this problem by regulating that borrowers cannot take more than 3 consecutive loans in a year, and lenders will be required to prove that a borrower’s finances have enhanced enough for affordability of other loans before they issue money.

Plus, CFPB is making suggestions of imposing a cooling off period of 60 days so that borrowers who have crossed the 3 loan mark will not be able to borrow more.

Borrowers Are Borrowing a Lot More Than Their Affordability Range

On average, a payday loan is one third of the income of a borrower and an auto title loan is more than 50% says Pew, and this is why they are unable to timely repay the loans.

Solution: CFPB will prevent long term (45 days and more) cash advance lenders from providing loans of more than 5% of a borrower’s monthly income. These lenders can offer loans ranging from $200 to $1,000 on an agreement of keeping interest limited a t 28% (payday loans are being charged at 300 %) and ensuring borrowers have no other outstanding debts.

Join CFPB in a meeting to get updates on their proposal and their future plans regarding the payday lending industry.


Related Video – A hearing about the new car loan rules by the CFPB:


5 Steps to Improve Your Credit Score

online-cash-advanceAn individual’s credit score signifies his or her credit worthiness, and if their scores are higher, they can move towards making an improvement in their financial lives.

Here are five steps every individual can take in order to improve their credit scores so that they can enjoy a much brighter financial future and get the loans they are looking for at low interest rates:

1. Make Sure Your Credit Reports State Accurate Information

People barely check their credit reports but you should remember that this is a very essential first step in improving your credit worthiness. The information present in your credit reports is what forms the basis of your credit score, so you need to check them regularly so that you can be certain that the information stated in each report is accurate and precise.

Go to the credit reporting agencies, pull out your records, and make sure all the information is correct and free of any kind of errors, because mistakes and errors play a major role in reduction of your credit scores and negatively impact them.

2. Make Timely Bill Payments

Paying all of your bills on time will make you a highly credit worthy candidate. It will show that you are responsible in making timely payments. With a high enough credit score, you will have no problems when you apply for loans or mortgages. Your payment history will be nice and healthy and this will be very helpful in repairing any bad financial history that was caused by past credit problems.

3. Understand the Factors That Determine Your Credit Score

Your credit score is based on the following factors and you need to understand every single one of them so that you can see the areas you need to work on, in order for your credit score to improve.
Bill payments: Missing your bill payments gives off a very negative impression and lenders will refrain from giving you any loans. You need to make sure every single bill is paid on time and in the full amount.

The level of outstanding debt: A good 30 percent of your credit score is based on the amount of your outstanding debt. If your debt levels are higher or come close to the limits on your credit cards, you won’t be very successful in obtaining a loan. So make sure you can pay off your debts and reduce your credit card balance so that you can have a higher credit score.

The length of your credit history: A lengthier credit history is preferred, but if you have a short history, you can make up for it by paying your bills on time and focusing on the other factors that can help you in raising your credit score. 15 percent of your credit score is based on this factor.
The kinds of credit accounts you have: A blend of credit cards with installment loans could work in your favor.

The number of credit accounts you have: Having a few credit cards can show that you are trustworthy but having too many may go against you if you’ve had problems in the past.

4. Avoid Discarding Your Old Credit Cards

Since a lengthy credit works in your favor, it’s a bad idea to discard and close your old credit cards for newer ones. Open new accounts only if it’s absolutely necessary, otherwise, you can utilize your old cards instead of buying new ones.

5. Patiently Wait For the Execution

The above mentioned steps cannot be accomplished overnight and it will take some time to pay off your debts, go through your credit reports, and following through on the other factors that are essential in successfully improving and enhancing your credit score. This is why you should be patient and complete the steps mentioned here so that you can be on a successful road to better credit scores.

Try to be smart and a lot more careful when handling your credit cards, and it won’t be long before you have a higher credit score.

1 Minute Video Summary: 

How to Avoid Payday Scams – F.T.C Provides Guidelines

There may come a time when you are in desperate need for instant cash. The need can arise due to any reason. This is where you can go for a payday loan. Payday loans are preferred by millions due to the fact that they are easy to obtain and offer quick cash in your time of need. However, there are many who criticize the industry. This can be credited to the various unlawful actions carried out against individuals opting for quick cash.
Moreover, there are those who try to take advantage of your situation. This, in turn, leads you to becoming a victim of a fraud or scam. To eliminate this issue, the Federal Trade Commission (FTC) has provided a series of guidelines which can help you avoid falling for payday scams.

Stay Clear Of Unsolicited Loan Offers

Regardless of how desperate you are for cash, you will have to keep in mind that payday loans are one of the most marketed products online. There are various companies that will reach out to you through unsolicited offers in an attempt to entice you to apply for a loan. The problem at hand is that a majority of these offers are nothing more than phishing and spam sites. These sites do no more than spread malicious software or get a hold of your personal information, including bank account details. To be on the safe side, it is highly advisable to stay clear of these products.

Ensure That the Lender Is CFSA Sealed

The CFSA was established for the protection of the consumers and for the effective regulation of the payday loan industry. Also popularly referred to as Community Financial Services Association, the association is informed in all aspects related to payday lending. That being said, it is important for you to make sure that the lender you are dealing with is certified by the CFSA. This can be verified by checking for the CFSA seal on their website. Doing so will assure you that you are dealing with a legitimate loan company.

Legit Lenders Do Not Demand Upfront Payments

As easy as the process may seem, you will have to keep in mind that no legitimate payday loan provider will demand upfront payment for their services. There are cases when you will be asked to fill an application or even credit report fees. The amount however is deducted from the total sum you are borrowing after everything has been taken care of.

Verify the Lender through Their Physical Address

You will come across various scams posing as legitimate businesses online. They are willing to offer you falsified information and records to justify their authenticity. There are those who are in desperate need of money and without thinking, make mistakes which land them in a bigger mess than they are in already.

This makes it even more important for you to be careful while looking for a reliable payday loan provider. The best way to separate scams from the legitimate businesses is by verifying and locating their physical address. Real payday lenders do not solely operate online but have a brick and mortar location as well.

Look Out For Red Flags

While dealing with finance and personal information, you have to ensure that the lender you are dealing with is legitimate. For most, this can be difficult but not impossible. To be able to distinguish the real from the fake, you will have to look out for some obvious red flags. Such scams give out little to no information about themselves, no matter how legitimate they may claim to be. Moreover, they are not authorized to ask for your bank account information either.

Do Your Homework

Before dealing with any payday lender, it is of utmost importance to make sure that you do your research. You should know who you are dealing with to avoid becoming a victim. For verification purposes, you can always check with the Better Business Bureau or any other financial regulators in your state to get a better understanding.

Moreover, there are other alternatives by which you can determine if a business is authentic or not.

  • If you have received an email or something by mail, check out for spelling mistakes.
  • Genuine lenders mostly have information about you. Receiving an email or mail addressing a general audience rather than you in particular is a cause for alarm. It goes without saying that lending companies should know who they are dealing with.
  • Be wary of those companies that mention a time limit. Such a task requires time and patience. Nothing can ever be done immediately. Being asked to hit a deadline is always suspicious.
  • Consider the medium of communication being used to contact you. It would seem highly irrational to be contacted about loans through a text message. Such details need to be dealt with on paper or through email at the very least.

Stay Clear Of Offers That Sound Too Good To Be True

You will come across various offers online promising you exactly what you need in return for minimal requirements. Offers that sound too good to be true are not worth the risk. You should compare the offer with other reliable lenders. The purpose of doing so is to find proper justification. The offers can include lower interest rates than what’s being demanded by the lender you are considering.

After carefully reviewing the aforementioned aspects, you will have a better understanding of the possible threats you may come to face when looking for a payday lender. By taking each and every step as advised by the FTC, you will ensure that you do not become a victim of fraud, scams or identity theft. Finding a reliable company is not difficult. There are those who wish to take advantage of a better offer. Anyone making the effort is doing what anyone else would do. At the end of the day, it is only logical to save money in the process but not at the cost of being scammed.

The 10 Americans Cities with the Biggest Drop in Wages

Business growthRecent statistics released by the U.S. Bureau of Labor Statistics (BLS) show that wages are continuing to fall in 10 American cities. shows the wage-drop hot spots across the nation. In many of these cities and states, payday loans may be able to help provide consumers extra relief to meet emergency costs and living expenses. Continue reading

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American Cities with the Highest Wages

Individuals with bad credit or low incomes can take the reins on their financial wellbeing in a number of ways. In the short to medium term, can help introduce consumers to reputable lenders for loan solutions. In the longer term, moving to a more prosperous city could seriously help boost your income.
According to recent figures from the U.S. Bureau of Labor Statistics’ Quarterly Census of Employment and Wages , it might be fruitful to consider moving to one of the top 10 cities with the highest wages.

What are the industries with the biggest wage increases?

For those looking to make a change from their current career field, maybe consider looking towards the following strong growth areas and regions.

  •  Oil industry: Within Midland, Texas and Odessa, Texas and Cheyenne, Wyoming and wages are rising by 6.1% per year.
  •  Mining, Logging and construction: Within Midland, Texas and Odessa, Texas employment has grown by 15% in the mining sector and wages are rising by 6.1% per year in the construction sector.

Look towards areas with large business presence

When wages overall are soaring across the board in a specific city or town, this can often be explained by the new presence of a large business or corporation.

For example, wages in the San Francisco Metropolitan area grew by 25% in December 2011 – December 2012. This is being attributed to Facebook, Inc. moving their headquarters to Menlo Park in San Mateo County which is part of the San Francisco Metropolitan area. To give context to the figures, wages within other counties in the San Francisco area all grew less than 10%. However, in San Mateo, the average weekly wage grew more than 100%.

The Top 10 cities
According to the BLS Quarterly Census of Employment and Wages, the top 10 cities with the biggest increases in pay are during the 4th quarters of 2011 – 2012 are:

1. San Francisco-Oakland-Mateo, California

  • 1-year wage growth: 24.7%
  • Average weekly wage: $1,706
  • December 2011 unemployment: 7.2%
  • December 2012 unemployment: 6.1%
  • Sectors (and companies) with notable growth: Computer system design services.

2. Vero Beach, Florida

  • 1-year wage growth: 11.1%
  • Average weekly wage: $839
  • December 2011 unemployment: 10.7%
  • December 2012 unemployment: 9.3%
  • Sectors (and companies) with notable growth: The Leisure and Hospitality industry accounts for 6,800 of the 45,900 non-agricultural jobs in the region and has benefitted from Florida’s increased minimum wage from $7.31 to $7.67 beginning in January 2012.

3. Midland, Texas

  • 1-year wage growth: 11.1%
  • Average weekly wage: $1,261
  • December 2011 unemployment: 3.7%
  • December 2012 unemployment: 2.9%
  • Sectors (and companies) with notable growth: Jobs in mining, logging and construction rose 16.1% between December 2011 and December 2012. In addition, jobs in trade, transportation and utilities rose 9.8% during the same period

4. Fond du Lac, Wisconsin

  • 1-year wage growth: 10.6%
  • Average weekly wage: $811
  • December 2011 unemployment: 6.4%
  • December 2012 unemployment: 6.1%
  • Sectors (and companies) with notable growth: The Manufacturing industry grew by more than 5.2% in during December 2011 and December 2012.

5. Provo-Orem, Utah

  • 1-year wage growth: 9.8%
  • Average weekly wage: $832
  • December 2011 unemployment: 5.4%
  • December 2012 unemployment: 4.9%
  • Sectors (and companies) with notable growth: Mining, logging and construction rose 17.4% between December 2011 and December 2012. Additionally, the number of jobs in professional and business services increased by 7.5%.

6. Odessa, Texas

  • 1-year wage growth: 9.6%
  • Average weekly wage: $1,105
  • December 2011 unemployment: 4.6%
  • December 2012 unemployment: 3.5%
  • Sectors (and companies) with notable growth: Oil and gas is a growing sector, as is mining, logging and construction with a 14.7% growth between December 2011 and December 2012. Jobs in trade, transportation and utilities also grew 11.8%.

7. Cheyenne, Wyoming

  • 1-year wage growth: 9.5%
  • Average weekly wage: $867
  • December 2011 unemployment: 6.8%
  • December 2012 unemployment: 5.6%
  • Sectors (and companies) with notable growth: Oil is the major boom industry, with over 30 oil companies operating in Laramie Country in 2012. Also, Trade, transportation and utilities has experienced a 4.2% growth. Mining, logging and construction also grew by 6.9% between December 2011 and December 2012.

8. Elkhart-Goshen, Indiana

  • 1-year wage growth: 9.1
  • Average weekly wage: $782
  • December 2011 unemployment: 10.9%
  • December 2012 unemployment: 9.5%
  • Sectors (and companies) with notable growth: Manufacturing (represents over half of all jobs in the area, with a 7.4% growth), RV plants currently hiring.

9. Dalton, Georgia

  • 1-year wage growth: 8.2%
  • Average weekly wage: $769
  • December 2011 unemployment: 12.5%
  • December 2012 unemployment: 11.0%
  • Sectors (and companies) with notable growth: Government (6% growth) and professional and business services (5.1% growth).

10. Topeka, Kansas

  • 1-year. wage growth: 8.1%
  • Average weekly wage: $823
  • December 2011 unemployment: 6.1%
  • December 2012 unemployment: 6.0%
  • Sectors (and companies) with notable growth: Food industry (Frito-Lay and Del Monte).

Until your circumstances change for the better, click here to apply for affordable personal loans.

7 Steps to Set Financial Priorities

coupleThe path towards a solid and stable financial reality can be tricky to follow without guidelines and some kind of structure to help keep you focused and motivated. Follow our tips to gain some perspective: Continue reading

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Top Ways to Borrow Responsibly: The Pros and Cons

For prospective borrowers living within the U.S. states which prohibit payday loans, there are a number of great alternatives. Continue reading

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Avoiding Phone Scam Sparked by Payday Loan

Watch this YouTube video to avoid becoming a victim of a payday loan phone scam that is currently being reported across the United States. Continue reading

How to Reduce Monthly Payments – Video

We could all benefit from finding ways to lower our bills. This YouTube video shows that consumers can do it with a few phone calls. Continue reading