The process of applying for and then getting an online Hometown Cash Advance should be simple, secure and fast. If you're considering a payday advance loan as a responsible way to get fast cash, take just a few minutes to prepare before you get started.
Know your need
Before applying make sure that your need is short-term, and that you'll be able to repay your loan on time. If an unexpected extra expense has caused you to come up short this month, an online Payday Loan can help. Problems that come up month after month are concerns that a professional credit counselor should handle.
Know if you qualify
Have a steady source of income, a form of identification, an active address and phone number, and a valid check for an in-store loan. Online loans vary, depending on the provider that you choose, and most will have what you need listed in the website. Hometown Cash Advance has specific payday loan qualifications.
Choose a lender
Payday lenders differ in more than qualifications. We provide information on how to choose the right payday lender.
Choose a method
Which method is the most convenient for your lifestyle: A trip to a local financial service center or a fast, private online Hometown Cash Advance? The application process will vary only slightly between the two.
Fill out an application
This only takes a few minutes, whether you apply online or in-store. You'll know promptly if you're approved.
Sign the contract
After approval, you're almost done. The contract between borrower and lender details all the rates, terms, fees and the repayment date.
Shortly after signing the contract, the funds are yours. Then, on the agreed upon date, repayment funds will be automatically withdrawn from your account or your post-dated check will be deposited. You can also choose to return the cash to the store to reclaim your personal check.
A payday loan provider who follows the CFSA best practices will give all customers the right to rescind, or return, a payday loan within a clearly stated, limited time frame. The best way to avoid this situation, however, is to take a careful look at your financial situation before borrowing. If you're unsure if you really need short-term financial help, or if you're unsure if you'll be able to repay the loan, it might be time to reconsider your options.
If you do decide to apply for a payday loan, make sure you choose a CFSA member. We provide information on how to best choose a payday loan lender. If you do decide to rescind your payday loan, a CFSA payday advance loan provider will allow you to do so at no cost. Typically, you only need to return the full amount of the cash loan to the payday loan provider before the end of the following business day.
Online payday loans are quick, hassle-free solutions designed to cover an unexpected monthly expense or emergency situation that falls between paychecks. Payday loans can be used whenever you need them. That said, payday advance loans should only be used occasionally, and not as an ongoing financial resource.
Before you borrow, answer the following questions:
Do you find yourself in this situation from month to month, or many months out of the year?
Are you going to be able to afford the loan plus the fee in two weeks, and stay within your budget?
Are you borrowing just enough to help your situation, or the full amount you are qualified for?
Are you looking at a payday loan as a long-term solution?
Will you have to use another payday loan to cover next month's expenses?
Have you ever rolled over a payday loan?
Have you ever considered multiple payday loans in one month to make ends meet?
Depending on your answers, you may need professional credit counseling. Do not depend on a payday loan for multi-month help. Visit Hometown Cash Advance's financial planning page, or seek out more serious financial aid.
When it comes to payday loans, the amount you can qualify to receive depends on a number of different factors, including income level and state of residence. You may be able to receive a higher maximum loan amount if you apply for payday loans online rather than applying in-store. Depending on whether or not a payday lender is a member of the CFSA, the maximum amount may be subject to other terms. When visiting a payday lender's store or website, it should be easy to determine the maximum payday loan amount available to you prior to submitting your information.
Payday loans are income-based loans, which is why lenders will request proof of steady employment. How much you earn will determine the initial amount you are able to receive. This keeps your payday advance loan from exceeding the amount you can afford to repay in one payday, not including other expenses.
State of Residence
This could affect the amount of a payday loan in one of two ways:
The borrower's state of residence
A CFSA payday loan provider will abide by the laws in each state in which they do business. The laws regulating payday loan amounts in the state where you live will be what adds to or detracts from your maximum amount. A CFSA lender will offer you the maximum amount your state allows, or less depending on your income.
The lender's state of residence
Non-CFSA payday lenders may practice what is called "choice of law." This allows them to apply to your payday loan the rules and regulations of the state in which they originate, instead of the laws of the state in which you live. This is especially true of online lenders. Choice of law can potentially lead to maximum loan amounts that are not within your means.
The payday loan industry is regulated by state and federal law. Members of the Community Financial Services Association of America (CFSA) encourage further self-regulation for the benefit of payday loan borrowers. Each payday loan provider has its own set of terms and conditions in addition to state, federal and CFSA rules. It's important to know the basics about a payday loan provider so that you know exactly what policies it upholds. For example, if you choose an online payday loan provider that is not based in your state of residence and is not a CFSA member, it will have a significantly different set of regulations than a lender like Hometown Cash Advance, who abides by each state's laws and the CFSA's Best Practices. We even provide a list of what to look for when choosing a payday loan provider.
The payday loan industry supports balanced regulations that are in customers' best interests. It strives for regulation to provide customers with privacy protection, to support customers' right to alternative financial options and to give customers the freedom of choosing a payday loan provider that best suits their individual financial needs. The CFSA works closely with state lawmakers to ensure that consumers are both protected and empowered, while also giving payday lenders every opportunity to provide responsible financial solutions.
Payday loan fees are regulated by state and federal law. Payday loan interest rates are expressed by using Annual Percentage Rate (APR).
Payday Loan Service Fees
The amount charged for a payday loan is the total amount borrowed, plus a service fee. This fee is a one-time, flat payment that varies only slightly depending upon how much is being borrowed. Payday loan service fees are regulated and dictated according to state laws where the borrower resides. Payday lenders who practice choice of law are exempt from this regulation. When a lender practices choice of law, the fees are regulated by the laws of the state in which the lender originates, and not by the state where the borrower resides. Reputable payday lenders typically avoid the practice of choice of law.
Payday Loan Interest Rates
United States federal law requires that the fees for any financial transaction be expressed to the customer in terms of annual percentage rate, or APR. The formula for APR assumes that that the loan will last a year or more. A payday loan is a two-week loan, so commonly seen APRs for payday advance loans are very high. This is because the APR is expressing the one-time loan fee in terms of an annual charge. Even though payday loans are not intended to be held for a year or longer, payday lenders express their fees in terms of APR to comply with federal law.
Hometown Cash Advance payday loan fees are regulated and mandated by the state in which you reside. The payday loan fees we charge are very competitive within the industry and in compliance with applicable state laws. It is our goal to offer you the best service at the most competitive fee possible. For a complete view of your fee-to-loan calculation, select your state the view the rates and terms that apply to you.
The confidentiality of a payday loan transaction depends on the reputation of the payday lender. In the case of online payday lending, security is even more crucial and depends not only on the policies of the provider, but on the structure of the company's website as well.
For the safest possible payday loan transaction, make sure of the following before borrowing:
Online payday loan lenders should encrypt their sites to ensure your security. Check in the bottom right corner of your Internet browser for the lock icon, which means that the site is encrypted and safe. You should also make sure your online transaction is secured through other reputable means as well, like with an Internet security and infrastructure specialist such as VeriSign. These additional security measures will be displayed on the site where you enter your sensitive information.
Dealing with a direct lender means your personal information goes directly to the payday loan provider and does not pass through an aggregator or a middleman. A direct lender is the safest possible provider for your payday loan transaction.
We provide a list of services to look for when choosing a payday loan provider.
Short term loans, such as payday loans, are intended to help you stretch your income and cover unexpected expenses. Because these loans are meant for short term financial relief, it's important to consider your budget and repayment terms carefully before you apply. When applying for your next short term loan, please consider the implications of late payment or non-payment and make sure you will have the necessary funds to repay your loan.
When applying for your next short term loan, please consider the implications of late payment or non-payment and make sure you will have the necessary funds to repay your loan.
What happens when I miss a payment on my payday loan?
If your payday loan payment is due and we're unable to withdraw funds from your checking account, the payment will be sent to collections. A returned check fee may be charged in some states; however, Hometown Cash Advance will not collect any additional fees.
What happens when I miss a payment on my installment loan?
If an installment loan payment is due and we're unable to withdraw funds from your checking account, the payment will be sent to collections. A returned check fee may be charged in some states; however, Hometown Cash Advance will not collect any additional fees.
After 30 days without a payment on your installment loan, your remaining balance will default, interest will stop accruing, and the entire balance will be sent to collections.
If my account becomes past due, will I face criminal prosecution?
If the payday loan provider that is responsible for your transaction is a member of the Community Financial Services Association of America (CFSA), then you will face no criminal charges in the event of a past due account. Non-CFSA payday loan lenders may have their own policies regarding past-due accounts, and it is possible that criminal charges may be applied.
CFSA members abide by a set of rigid Best Practices, which encourage the self-regulation and responsible management of the payday loan industry. This responsibility extends to the fair treatment of loan borrowers who have fallen behind on their repayment. If your account becomes past due, you will still be responsible for all incurred fees, including any returned check fees, in addition to your balance and any late fees that your provider or bank have within their policies to charge you. If your payday lender thinks the situation is appropriate, your account may be given to an outside collection agency. That collection agency will then take over the resolution of any past due accounts.
At Hometown Cash Advance, we offer a variety of ways to renew your short-term loans. These include payday loan refinancing, installment loan refinancing, and rollovers.
Please read on for disclosure of our renewal policy and answers to common questions concerning these three types of short-term loan renewals.
What is payday loan refinancing?
Payday loan refinancing allows you to apply for additional financing to extend the amount of time you have to repay your loan. When you refinance your payday loan, you must pay off your existing finance charges. Some states also require you to pay down a portion of the principal on your existing loan.
How will I know when I'm eligible for refinancing?
If you've recently taken out an online payday loan from Hometown Cash Advance and you become eligible for refinancing, you'll see a notification message upon logging into your "My Account" page.
How do I refinance my payday loan?
When you're ready to refinance your payday loan, start by logging into your "My Account" page and clicking the button labeled "Refinance Now." Note that this button is only visible when your loan is eligible for refinancing.
After clicking the "Refinance Now" button, you'll be taken to a screen that allows you to customize the refinancing of your loan. You'll be shown the refinancing options available to you, which may include standard, step up, or pay down.
With standard refinancing, you pay only the transaction fees due on your previous loan. However, because you are extending the loan principal another term, you will be responsible for additional fees.
If you qualify for more financing than you borrowed with your previous loan, you can choose to step up your refinancing amount. When you step up, you take out a second loan that's larger than your prior loan. This money is automatically applied towards the principal and fees of your previous loan, and any additional cash goes directly to you. However, since your new loan is larger than your original loan, you will be responsible for a larger principal with accompanying fees on your next due date.
You can also choose to use your refinancing to pay down the principal of your previous loan. In fact, this is required in some states. When you choose the pay down option, you not only pay off your existing fees, but you also pay off part of your principal. Because the remaining balance on your principal is extended to another term, you will be responsible for any additional fees on that balance.
Once you choose which refinancing option to proceed with, you should select the amount of your refinance. As you select the amount of refinancing you would like, a refinance summary automatically updates to show you the amount of funding provided to you, the refinance principal, refinance fees, and the total refinanced amount. When everything is completed the way you want it, just click "Continue."
On the next screen, you will be provided any funding documents that require your electronic signature. Upon signing and submitting these documents, you will be taken to a Thank You page that includes your loan number, the number of refinances you have remaining, and a refinance summary similar to the one described in the previous paragraph.
Where can I find the fees and due dates for my payday loan refinance?
The fees and due dates for your payday loan refinance can be found during the application process on any page with a refinance summary. The refinance summary will include the due date, principal amount, fee amount, and total amount due for your new loan. You can also find the next payment amount, next payment due date, and loan number for any of your existing loans on your My Account page.
How many times can I refinance my payday loan?
The number of times you can refinance your payday loan varies from state to state. Please see our state center for more details regarding payday loan refinancing in your state. In addition, when you apply for online payday loan refinancing through your My Account page, you will see messaging letting your know how many refinances you have left.
What is installment loan refinancing?
Installment loan refinancing allows you to apply for additional financing to extend the amount of time you have to repay your loan. When you refinance your installment loan, you must pay off your existing finance charges.
How will I know when I'm eligible for refinancing?
If you've recently taken out an online installment loan from Hometown Cash Advance and you become eligible for refinancing, you'll see a notification message upon logging into your "My Account" page.
How do I refinance my installment loan?
When you're ready to refinance your installment loan, start by logging into your "My Account" page and clicking the button labeled "Refinance Now." Note that this button is only visible when your loan is eligible for refinancing.
After clicking the "Refinance Now" button, you'll be taken to a screen that allows you to customize the refinancing of your loan. As you select your new loan amount, a refinance schedule and summary will automatically update to reflect the details of your new loan. Just click the "Continue" button once you're ready.
On the next screen, you will be provided any funding documents that require your electronic signature. Upon signing and submitting these documents, you will be taken to a Thank You page that includes your loan number, the number of refinances you have remaining, and a refinance summary.
Where can I find the fees and due dates for my installment loan refinance?
The fees and due dates for your installment loan refinance can be found during the application process on any page with a refinance summary. The refinance summary will include the due date, principal amount, fee amount, and total amount due for your new loan. You can also find the next payment amount, next payment due date, and loan number for any of your existing loans on your My Account page.
How many times can I refinance my installment loan?
The number of times you can refinance your installment loan varies from state to state. Please see our state center for more details regarding installment loan refinancing in your state. In addition, when you apply for loan refinancing through your My Account page, you will see messaging letting your know how many refinances you have left.
What is a rollover?
A rollover lets you reconsolidate your payday loan into an installment loan. An installment loan offers you access to more cash with more time to pay it back. When you rollover your payday loan, you must use your new loan to pay off your existing finance charges.
How will I know when I'm eligible?
If you've recently taken out an online payday loan from Hometown Cash Advance and you become eligible for a rollover, you'll see a notification message upon logging into your "My Account" page.
How do I rollover my payday loan into an installment loan?
When you're ready to rollover your payday loan into an installment loan, start by logging into your "My Account" page and clicking the button labeled "Rollover My Loan." Note that this button is only visible when your loan is eligible for a rollover.
After clicking the "Rollover My Loan" button, you will be taken to a screen that allows you to customize your rollover. As you select your new loan amount, a rollover schedule and summary will automatically update to reflect the details of your new loan. Just click the "Continue" button once you're ready.
On the next screen, you will be provided with any funding documents that require your electronic signature. Upon signing and submitting these documents, you will be taken to a Thank You page that includes your loan number, the number of rollovers you have remaining, and a rollover summary.
Where can I find the fees and due dates for my rollover?
The fees and due dates for your rollover can be found during the application process on any page with a rollover summary. The rollover summary will include the due date, principal amount, fee amount, and total amount due for your new loan. You can also find the next payment amount, next payment due date, and loan number for any of your existing loans on your My Account page.
How many times can I refinance my rollover?
The number of times you can rollover your payday loan into an installment loan varies from state to state. Please see our state center for more details regarding rollovers in your state. In addition, when you apply for a rollover through your My Account page, you will see messaging letting your know how many rollovers you have left.
The payday loan customer agreement is a comprehensive document that fully outlines all terms, conditions and applicable laws of the payday loan transaction. This document is designed to provide the borrower with detailed descriptions of everything expected of both the payday loan provider and the borrower. This document also explains all state and federal laws that apply to the loan. Whether a payday loan transaction occurs online or in-store, it's important that the borrower is provided with all the information required to make the best, most informed decision possible.
The payday loan customer agreement will contain the following:
State and Federal Disclosures
Depending on where the payday loan provider is located, state laws will vary. Some states have specific laws pertaining to the amount borrowed, and can range from a flat amount to a percentage. For example, through Hometown Cash Advance, Illinois payday loan borrowers can receive 25% of their gross monthly income or $1,000, whichever is less. Alabama customers can receive a maximum of $500. There are also laws in place that define the minimum and maximum borrowing period for a payday advance loan.
Regardless of the state of the payday loan provider, federal laws will apply everywhere and are outlined so the borrower can take them into consideration.
Rates and Terms
Every payday loan provider has its own applicable charges that will affect the transaction. These are outlined in the payday loan customer agreement, including service fees and fees that will apply should the repayment become past due. The service fee is the flat amount added to the loan amount. This fee will be expressed in a dollar amount, as well as Annual Percentage Rate (APR) in accordance with federal law.
In most cases, borrowers who receive Social Security or disability payments will qualify for a payday loan since many payday loan providers accept Social Security and disability payments as sources of reliable monthly income. However, be sure to confirm this with the provider you choose prior to beginning the application process.
Hometown Cash Advance accepts social security and disability payments as an income source for a fast payday loan. To apply online, you'll simply need to report that this is your source of income. You may need to fax a copy of your award letter during the application process, depending on the regulations of your state of residence. You can find out if your state requires faxing by going to Hometown Cash Advance's state center. To apply in-store, you'll need to bring a copy of the award letter with you.
If the payday loan provider you've chosen offers faxless online payday loans, and you live in a state that does not require faxing, then it is possible that you won't be required to fax the provider any documents. If faxless payday loans online are available, it should be displayed on the provider's website. Certain states require additional documents be faxed, regardless of whether or not the lender allows for no fax online payday loans.
While filling out the online application, the application should state whether or not you are eligible for a faxless payday advance loan. If so, then no additional information is required. Should you need to fax in documents, the most common ones include:
Most recent paystub.
Most recent bank statement.
Proof of last loan clearing your account.
Proof of identity.
Proof of SSN for IN , OK and MI residents only
If any of these documents are needed, it should be clearly requested in the application, followed by the correct fax number so that the lender can promptly receive your documents and complete the application process.
Payday loan applications vary in approval time depending upon the lender and the method of application. In-store payday loans will sometimes have a faster turnaround time than online loans if the borrower is ready with all the required documentation.
In-Store Payday Loans
For an in-store payday loan, the borrower needs to present:
Proof of regular, verifiable income.
A working phone number.
An active checking account.
Income sources can be a full- or part-time job, Social Security or disability (with award letter), self-employment (1099 form), and in some cases alimony or child support. Each individual lender will have restrictions on what they will allow for proof of income, so be sure to check ahead. If all the documents are valid, the approval takes only a few moments, and then the cash is in your hand. It really can be as fast as a phone call to verify the phone number, and your payday loan is approved.
Online Payday Loans
The estimated time for online payday loan approval depends largely on whether or not the lender, in accordance with state law, allows for no fax payday loans. The requirements are the same as with an in-store payday loan. With all the correct documentation, a faxless online payday loan can be completed in just minutes — the combined time it takes for a representative to verify the customer's phone number and for the borrower to respond to verification emails sent to his or her email address. If the lender does not allow for faxless payday loans, then the application cannot be approved until the borrower faxes in the required documents.
Online payday lenders with membership in the Community Financial Services Association of America (CFSA) will always provide easy access to these documents for review prior to signing the agreement. As a general rule, the CFSA seal should be a major factor in choosing a reputable payday lender. Learn more about how to choose a payday loan provider
The payout time of a payday loan varies between different providers and the different methods of applying.
Online Payday Loans
Following loan approval—for customers who qualify for the faxless application process—contact information will be validated via phone and email. Then, the loan funding can occur the same day if you qualify for instant funding.* Otherwise, funds are directly deposited into your checking account as soon as the next business day.
Payday loans that require faxing will have a longer payout time. The approval process and state law will require one or more additional documents be sent in by fax to a number on the application. So, it’s up to the borrower to determine how fast they will be approved. Once the approval goes through, the funds are directly deposited and will be available the next business day.
In-Store Payday Loans
Payout for an approved in-store payday loan is instant. The approval process should be the only wait time. This includes the verification of all documents, including proof of income, I.D., phone number and active checking account. Then, after reading through and signing the payday loan agreement, the borrower will have the cash in hand before leaving the store.
A payday loan can be paid back by either automatic withdrawal or in-store cash exchange. There may be additional repayment options open depending on the lender.
For online payday loans, an automatic withdrawal is the only means of repayment. It is also the most common means for in-store payday loans. In-store payday loans are completed by exchanging a post-dated check for the amount of the loan, plus the lender's service fee. On the agreed upon repayment date, the lender simply deposits the check, causing the funds to be taken automatically from the borrower's account. Online payday loans require that an active checking account be submitted securely to complete the online application. The funds are then withdrawn on the date repayment is due.
The lender may or may not notify you of an upcoming repayment date, or when the check is being deposited. That's why it's so important to plan ahead, and to make sure that the funds are available in your account on that day. If the account is short, borrowers may be responsible for returned check fees from the bank, as well as late repayment fees and penalties from the payday loan provider. Make sure that you've planned properly and that your account is ready on the date the lender goes to withdraw the funds.
Some payday lenders will allow an in-store payday loan customer to bring the cash they borrowed back to the store before the due date, in exchange for the return of their post-dated check. Make sure that your lender allows for this type of repayment before planning for it.
An additional payday loan can be applied for immediately as long as all the requirements are still met and there are no outstanding payday loans from other lenders. The only exception would be if state laws demand a borrower wait a certain period before applying for another payday loan. Lenders that abide by the laws of the state will enforce this waiting period. Afterward, you are free to apply for another payday loan.
If you need to wait before taking out another loan, take the time to consider why this restriction is in place. A payday loan is meant to be an occasional, short-term financial solution. While the option is available to have two consecutive payday loans, it's important to understand the purpose of payday loans and to use them responsibly. If you find yourself needing regular payday loans in order to make ends meet, it may be time to seek serious, long-term financial help. It's up to you as the borrower to determine when your situation is in need of professional assistance. Payday Loan offers a cash management page to help along the way and additional financial resources that provide tips for smart budgeting.
When it comes down to it, even the most financially responsible people face tough financial situations from time to time. Sometimes unexpected cash emergencies occur and require financial attention. When these situations arise, a payday loan may be the appropriate solution for you.
Payday loans are safe, short-term loans meant to cover small or unexpected costs until your next paycheck. They are a useful resource to consider when faced with overdue bills, important large purchases, or the possibility of bouncing a check and incurring overdraft fees, overdraft protection fees, returned check fees, etc., but they are NOT intended to be incorporated as part of a long-term debt management solution.
It could be said that a payday loan is similar to a spare tire:
A spare tire is a short-term solution that can get you from destination A to destination B until you are able to make it to the tire shop. However, spare tires are not designed to handle long-distance journeys. Similarly, the payday loan is a short-term solution meant to give you immediate cash-flow until your next paycheck, but it is not the economic solution for long-term debt management.
If you're facing financial hardship, there are plenty of other solutions available that may be more appropriate for your goals. But if you're searching for a short-term quick-cash solution, a payday loan may be exactly what you need.
Hometown Cash Advanceprovides personalized and knowledgeable customer service with competitively-priced, hassle-free financial products. Hometown Cash Advance offer convenient, secure online options. For more than a 5 years, our reputation for integrity has ensured your confidentiality and security. We continually develop new partnerships with financial service leaders to add new products and services to meet your changing needs
Not all loan providers adhere to the standards and best practices of the CFSA and/or follow state regulations properly. Be sure to ask about the standards and practices of any financial service providers you do business with, and be sure to ask for full disclosure of all terms and conditions. Also, consider the provider’s measures for your security, whether online or at their store.
The best way to feel secure about your online payday loan provider is to make sure the provider meets the following set of criteria:
You can easily find a full disclosure of all their terms and conditions.
The online payday loan provider follows the financial laws and regulations of the state where you reside.
Most importantly, your online payday loan provider should be a member of CFSA
The provider has a physical address and phone number, as well as an email address. You should never just rely on an email address for contact information.
The Community Financial Services Association (CFSA) is the payday loan industry’s national trade group. The CFSA helps to promote appropriate consumer protections, enforce privacy and maintain exceptional professionalism. Hometown Cash Advance is a founding member, and Hometown Cash Advance’s leadership serves as active participants on the Board of Directors. Hometown Cash Advance adheres to, and in fact helped write, the CFSA Best Practices Guidelines, including principles that encourage full disclosure, truthful advertising and consumer responsibility.
Trying to find good information about the reality of the payday loan industry can be difficult. Many vocal opponents have accused our industry of bad practices, creating myths that simply don't hold up after a close look at the facts.
Payday Loan, a leader in the payday loan industry, has worked closely with the Community Financial Service Association of America (CFSA) to clear the air and shed some light on some false assumptions about the entire payday loan industry. Here are some common myths you may see about payday loans and the reality behind them:
When critics claim that a payday loan charge is 300% annual percentage rate (APR) or more, that can sound pretty shocking out of context. However, it's important to keep in mind how misleading that claim is when it comes to payday loans.
APR literally represents the interest charged over the course of a full year. This isn't how a payday loan works. The course of a payday loan, from the time you receive your loan until it's time to pay it back, is generally two weeks. The Federal Truth In Lending Act requires lending institutions to fully disclose the terms of a loan to a borrower. All fees and interest earned must be shown in terms of APR.
The average fee charged by a payday lender like Payday Loan is a flat $15 per every $100 borrowed. The charge on a short-term loan is commonly misunderstood when viewed solely in terms of APR. Attention to the APR, without any real explanation as to how it is being calculated, is often misleading to the consumer.
If other common fees were explained in terms of APR, most consumers would be shocked. Consider the following examples:
$100 payday advance with a $15 fee = 391% APR.
$100 bounced check with $54 NSF/merchant fees = 1,409% APR.
$100 credit card balance with a $37 late fee = 965% APR.
$100 utility bill with $46 late/reconnect fees = 1,203% APR.
Don't be fooled! The only way to truly be charged 300% for your payday loan is to roll it over twenty-six times, or over the course of a full year. This is simply unrealistic in most instances, as we explain below.
Every state has different regulations for payday lending. Some states don't allow you to rollover your loans at all, making the cycle impossible. In states that do, CFSA members like Check 'n Go limit rollovers to four-or the state-dictated limit-whichever is less.
Even with state regulations and the CFSA best practices in place to keep you safe, it's important to stay informed, watch your budget and be responsible with your borrowing. It's also very important to make sure that you only borrow from reputable lenders. That's why the CFSA and Check 'n Go both provide you with helpful resources for managing your finances.
While it is frequently stated that the payday loan industry seeks to take advantage of low-income individuals and their families, this simply misrepresents the actual users of payday loans. Every payday loan requires proof of employment and an active bank account to be issued. After the loan has been made, both federal and CFSA-instituted regulations are in place to keep borrowers on track to quick, penalty-free payday loan repayment.
In reality, payday loan customers represent the hard-working core of America's middle class. CFSA research shows that their incomes range from $25,000 to $50,000 annually, that 94% have a high school diploma or more, and that 56% of payday loan consumers have attended or graduated from college. Payday loan borrowers are educated, employed people who typically have families to support, who occasionally use payday loan to help bridge the gap between bills.
This is a common misrepresentation of the payday loan industry. When compared to competing lending options, payday lenders fall short in terms of profitability. Small, short-term loans are expensive to provide and maintain relative to the demand. A recent study cited by the Buckeye Institute concluded that the average profit margin for payday loan only stores was only 3.57%. Your typical commercial lender has a profit of 13.04%, which is much higher than your local payday lender.
The Truth in Lending Act requires that lenders provide up-front, full disclosure of terms and conditions. In addition, the CFSA Best Practices and Consumer Bill of Rights make sure that all CFSA approved payday lenders put consumer education and empowerment first. Payday Loan proudly wears the CFSA seal and offers full descriptions of all its terms and conditions.
When you need a payday loan, it's important to read all the fine print and to make sure that the lender is legitimate. One of the easiest ways to do this is by only borrowing from a CFSA approved payday lender.
The growth of any business depends on consumer demand and the payday loan industry works exactly the same way. Payday lenders offer a valuable service that most banks and other lenders have stopped offering. Payday loans providers exist because there is a genuine need in the community they are able to provide. With state-to-state regulations and constitutional amendments delegating the fair and ethical treatment of loan consumers, the idea that the payday loan industry is predatory is a distorted, inaccurate picture of the reality of the business.
In addition to being more expensive than a payday loan, overdraft and late fees are applied to your credit card or bank account without immediate notification. This can leave you with an unpleasant surprise the next time you open a bill or look at your account statement. With a payday loan you know your rate, a one-time flat fee, before you sign, every time.
A payday loan fee, on average, is typically around $15. Compare that with a typical bank account overdraft fee ranging from $30-$54 and a credit card late fee which can be upwards of $37. Then there's the alternative** of simply not paying your bills on time. Late bills often result not only in late fees, but in reconnection fees as well.
A payday loan, when used responsibly, can often be the smart alternative** to these truly expensive fees.
Anti-payday lender activists seek to eliminate what short-term credit options remain available to those who need them. There is no way that those various organizations opposing payday loans can speak with one voice that represents all customers who continue to use payday loans the way they were meant to be used: with responsibility falling equally on the lender and the borrower.
Companies, like Payday Loan who follow the ">CFSA's Best Practices are dedicated to practicing all collections in the best way possible. We strive to educate the consumer and to make sure that our borrowers clearly understand the payday loan process. Our ultimate goal: only lending to borrowers who are able to use a payday loan responsibly
If collection on an account becomes necessary, Payday Loan always handles the process in a fair, lawful, and most importantly, professional manner, involving no criminal actions. If absolutely necessary, and after all other approaches have been tried, the lender may turn the issue over to a collection agency.
Without the availability of payday loans, many hardworking individuals who simply need occasional help making ends meet would have no real options. This would inevitably lead to an increased number of bounced checks, late fees, and overdraft fees for these individuals, creating further expense and greater debt for them in the long run.
Anti-payday activists are attempting to make decisions for the community at large and remove options for people who work hard who just sometimes have to find a responsible way to stretch their budgets. Communities prosper when their citizens are given a variety of options that simply allow them to make the best financial choices for themselves.
Interested in learning more payday myths and the reality behind them? Statistics and figures in this article were references from The Community Financial Services Association of America ('CFSA') and the Buckeye Institute.