Payday Loan Facts vs. Fiction

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Cash Advance Facts   Facts vs. Fiction   Consumer Info

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.

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.

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.

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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