Payday Lender Advance America: Numbers Look Good, But Can You Stomach the ...
Payday loans are very short term - 18 days average advance in America last year - and very expensive. The average borrower of $ 370 was charged $ 55, which advance America prefers not to draw interest, but which is equivalent to about 300% annualized. And on its Web site, company cops to load equivalent to 404% in Illinois, Alabama 456% and 533% in Texas (those who use online rather than going to advance America's store in Texas to pay 664%). Stiff, eh? If you are not one who lives check to pay check, the demographics of the company might shock you: median household income of about $ 49,000.
Consumer advocates use the word "predator" and "abusive" in the discussion of the payday loan industry, and some states have increased regulation and indeed launch Advance America and other out of town. Congress hot, but has not passed, the bills to the interest of the CAP to 36%. Advance America doubts that he could stay in business charging these rates.
That all sounds pretty bad, but here is the really ugly part of the business model: Advance America said it hired a new customer service representative for every 100 clients and 150 new. Eeesh. Talk about labor.And the day before a payment, each receives a personal phone call reminder. It is the hand-to-hand against the anonymous attack drones million pieces of mail that the industry's super-effective credit card engages in. The allowance for doubtful accounts was $ 104 million the Last year, surpassed the record of spending by labor costs in stores $ 180 million. Everything for $ 35 million in profits?
The wide availability of credit is a great thing. And lenders deserve to charge a rate that produces a profit, within reason.But, as with mortgages, payday borrowers could quality for a lot loan rates cheaper. Payday lenders thrive on ignorance borrower. By Advance America is cheap, but have perhaps not make you proud.
"We would advise consumers to not opt in because "overdraft protection" amounts to a short-term loan, like a payday loan." Some banks acknowledge there is a