Pawnshop Launches Internet Business

You’ve got to admit that we in the “sub-prime” financial services industry are a creative lot! has come up with what we think is a great idea; an Internet based pawn lending business.

They make loans on jewelry, watches, gem stones, gold and memorabilia at a rate of 4% to 6% per month. The rate for loans from $1800 to $180,000 is 6% paid monthly. Loans of $1799 and less are 4% per month.

They appear to be the first true Internet pawn lender. Here’s how it works:
1) You go to their web site and select a category; watches for example
2) You estimate it’s market value, enter a description, post a picture if you wish…
3) You get an immediate estimate of the amount they will loan you
4) You then provide them with your contact info and ID.
5) They pay for a courier service to pickup your item
6) They inspect it and if both parties agree on the value they ACH the funds into your bank account. Typically they loan 40% of this value.
7) You pay 4% to 6% monthly interest.
8) At the end of 6 months you pay off the loan with interest and a “redemption fee” and they ship your item back by courier.
9) If you fail to repay the loan they sell the item

It’s discrete, convenient, there are no questions, no credit checks, and fast.

We like this business model!

Oh, and one more thing. It’s only available in England currently.

Which of us will be the first to launch a Internet based online pawnshop?


Average Folks Question Banning Payday Loans

Sometimes we forget just what a payday loan means to a family that experiences a temporary financial setback and has no where to turn for help.

I am a single father of three children. I have had a career in the aviation field since serving 7 years in the U.S. Navy. I make mid 40’s for yearly income. Then I pay my monthly bills and there is no more room for anything else. There have been several times that these payday advance businesses have saved me from a grim financial time. In this position, I haven’t got family, friends to rely on and have to resort to “survival of the fittest.” When a check is returned at my bank, it is the equivelant charge of getting a payday loan of $250 (the fee would be $37 vs. a $35 fee from my bank.) Granted, of course there is a loan involved but the money was used for food, gas etc.

Why is it in the interest of our local state gov. to forbid this? I have spoken to people that are well off with money and everyone of them have agreed that these loans should be terminated, the business should be put under as if they are loan sharks. I have never been late on payment so I wouldn’t know…

Go here to read the entire article as written by average folks using payday loans to solve temporary problems.


Advance America Suffers 4 Percent Profit Loss & Loses Chairman

Advance America announced their chairman and co-founder, George Johnson, stepped down for personal reasons.

Advance America was founded in 1997 and currently is operating approximately 2800 loan centers in not only the USA but additionally in Canada and England.

William (Billy) Webster who is also a co-founder will replace Johnson.

The scuttlebutt is that Johnson resigned after the company posted a 4% profit loss in the first six months of the year. Others in the industry discount this assessment.

There is little doubt the payday loan industry is under attack as is the mortgage industry, the credit card industry, the banking industry, the oil industry, and others. It’s been noted elsewhere that when the US economy experiences a slowdown the regulators and
competitors, under the guise of consumer protection, attack our industry more vociferously than ever.

Ultimately the payday loan industry is driven by consumer demand; consumers have a huge demand for small loans that are easily obtained with a minimum of hassle. That describes the payday loan product!

Bottom line, when the car requires repair, or the lights are about to be turned off, or you need cash to pay for a presciption, or, or, or… The payday loan product fills the need. And it has certainly been proven that a $15 fee per $100 loaned is still a better deal than bounced check charges or overdraft fees.Why Banks Hate Payday Loans

It should be noted that even in states/provinces not having payday loan physical locations, consumers by the tens of thousands apply for and receive funds via the Internet or call centers! Many of these businesses are offshore. Regulators, legislators and competitors (so-called consumer protectionists) are forcing payday loan consumers into the hands of the offshore companies. Domestic payday loan companies welcome regulation as long as they are allowed to continue to operate at a reasonable profit under any proposed legislation.


Payday Loan Legislators Do Not Understand Us!

It’s crazy how the regulators and legislators who feel the need to control our payday loan industry in an effort to “protect” consumers consistently fail to understand us!

Witness the latest introduction of payday loan legislation by the esteemed senator from Hawaii. These senators introduced a new act to”encourage mainstream institutions to be able to bank the unbanked”.

THEY DON’T GET IT! Payday loan companies ONLY make loans to consumers having a BANK ACCOUNT! HELLO!! Our customer is NOT UNBANKED! They know what they’re doing when they choose to use our product.

And as far as providing consumers with “financial literacy and educational opportunities”, THEY DON”T WANT TO BE BOTHERED! Why don’t the regulators ask? Payday loan customers simply want $300 to $1000 fast without a hassle! Most of the customers I talk to understand where the majority of bank and credit union profits come from Why Banks & Credit Unions Hate Payday Loans

For additional commentary on the stupidity of legislators we suggest you proceed to Payday Pundit

U.S. Senator Daniel K. Akaka (D-HI) introduced the “Improving Access to Mainstream Financial Institutions Act of 2008”. It is cosponsored by Senators Charles E. Schumer (D-NY), Joseph I. Lieberman (ID-CT), and Daniel K. Inouye (D-HI). It is endorsed by The National Association of Federal Credit Unions, the Hawaii Credit Union League, the Council for Native Hawaiian Advancement, and the Hawaii Alliance for Community-Based Economic Development.

Senator Akaka said: “About 45 million Americans do not have a bank or credit union account, denying them access to basic financial services. With these federal resources, mainstream institutions will be better able to bank the unbanked. This bill will also encourage banks and credit unions to provide an affordable alternative to predatory payday loans which typically carry exploitative fees. Several credit unions have developed similar products, including the Windward Community Federal Credit Union in Kailua (Hawaii), which used a federal grant to develop an affordable alternative to help the U.S. Marines and others they serve. More working families need access to affordable small loans.”

Senator Lieberman said: “At a time of rapid innovation in the financial services industry, it is discouraging that a so many Americans remain disconnected from the mainstream system of banking and finance. The sad reality is that in many low-income neighborhoods, the primary source for financial services is storefront check cashers, rent-to-own shops, money transfer operators, and payday lenders charging predatory interest rates. The legislation we are introducing today will help bring low-income communities closer to the retail financial services and savings opportunities they desperately need.”

“A bill like this has been a long time coming. It will promote a culture of saving by encouraging more people to open bank accounts. This bill will also help families get out of the cycle of debt caused by payday loans,” Schumer said.

U.S. Senator Daniel K. Inouye said: “Given the economic struggles currently confronting our nation, this legislation can help many Americans by bringing families without bank accounts into the mainstream of our nation’s financial system. I believe this bill will help many families build savings and improve their credit-risk profiles. That will lower the cost of payment services, and eliminate a common source of personal stress. Enabling more people to be a part of our mainstream financial system, whether through a credit union or a bank, will build the right financial foundation for many families.”

The bill creates two grant programs within the Department of the Treasury:

• The first authorizes grants intended to help low- and moderate- income unbanked individuals establish bank or credit union accounts, providing consumers with alternatives to rapid refund loans, check cashing services, and lower cost remittances. In addition, bank and credit untion accounts provide access to savings and affordable borrowing opportunities.

• The second provides consumers with a lower cost, short term alternative to payday loans by encouraging the development of affordable payday loan alternatives at mainstream financial institutions. Consumers who apply for these loans would be provided with financial literacy and educational opportunities. Loans extended to consumers under the grant would be subject to the annual percentage rate promulgated by the National Credit Union Administration’s (NCUA) Loan Interest Rates, currently capped at an annual percentage rate of 18 percent.