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Payday Loan Facts vs. Fiction
Cash Advance Facts • Facts vs. Fiction • Consumer Info
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| Want the truth about payday loans and cash
advances? There are plenty of myths about payday advance services, so we have
put together a list of the more common misconceptions about this service. You
may also take a look at our
FAQ Page for more information on payday loans, cash
advances and fast cash loans. |
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| FICTION: They charge
outrageous rates. |
| FACT: Payday
advance fees typically cost less than customers' alternatives. |
| • Bank/merchant fees on one bounced
check can cost three times that of a $100 advance. |
| • Payday advance APRs are often lower
than customers' alternatives (on the same 2-week term). |
| • $100 payday advance with $15 fee =
391% APR. |
| • $100 bounced check with $48 NSF/
merchant |
| • Fees = 1,251% APR |
| • $100 credit card
balance with $26 late fee = 678% APR |
| • $100 utility bill with
$50 late/reconnect fees = 1,304% APR. |
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| FICTION: They put
customers into a cycle of debt. |
| FACT: Most
customers use payday advance responsibly and moderately. |
| • It's a closed- end, short- term
transaction with a one- time flat fee. No revolving debt and no additional fees
or accruing interest if not paid when due. |
| • 66% use payday advance to cover
unexpected expenses or a temporary reduction in income. |
| • 34% use it for planned expenses or
other discretionary uses. |
| • 60% either did not renew in the
last year or renewed only 1-4 times. |
| • Research and regulators confirm
more than 70% use the service about once a month or less. |
| • The Credit Research Center national
survey reports 78% use 14 or fewer times annually. |
| • Wisconsin Dept. of Financial
Institutions reports 71% use 15 or fewer times. |
| • North Carolina Commissioner of
Banks reports 73% use once a month or less. |
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| FICTION: They take
advantage of unsuspecting customers. |
| FACT: Payday
advance customers make informed decisions and receive consumer protections
under law. |
| • Millions choose payday advance as a
dignified, discreet solution for temporary cash flow problems without asking
family for money or pawning personal items. |
| • 70% choose payday advance for
reasons of convenience (quick, easy process & fast approval). |
| • 96% are aware of the finance charge
& 78% recalled it being disclosed as an APR. |
| • 92% believe payday advance is a
useful service, only 12% were dissatisfied with last advance |
| • 33 states and D.C. provide
balanced, responsible regulation of payday advance companies. |
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