Payday Loans & Freedom of Choice

There are a lot of great posts regarding payday loans, Ohio, big brother issues and more over at .

Here’s an example and we recommend you head over there for more pros and cons on payday loans and big brother…

Casey had an interesting insight:
“Payday loans are faulty product deserving of some common sense regulation.” (1) PD loan are already regulated in Ohio. This new “law” limits PD lenders from operating and extending loans by SIGNIFICANTLY cutting their profits per loan. (more on that later)

“The free market works best when there is freedom and choice.” 2) ABSOLUTELY 100% agree with this statement! Financial Freedom of Choice is a BASIC FUNDAMENTAL RIGHT!

“The payday industry may shroud itself in the mantra of choice, but in reality the people trapped by payday loans have few choices. If they did, they’d probably looking for an alternative to a 391% interest loan. ” (3) Do you know why the typical PD customer makes the CHOICE to use our services? B/c we are cheaper than bouncing a check (released yesterday from– ” A bounced check costs an average of $28.95, up 2.5 percent from a year ago, according to the survey. (AP) WHAT?? How crazy is that??!)
Customers choose to borrow from a PD lender b/c we offer a better rate/fee. $15 per $100 borrowed. So if I have a $100 check that I know will bounce— do I decide to suck it up and pay my bank’s charge of $28.95 OR do I look at my options and decide to get a PD loan for almost exactly half my bounced check fee…. Hmmmm…. this is a tough one…. gee>>> I think I’ll GO WITH THE PD LOAN!!!!!

Banks are notorious for their EXPENSIVE hidden charges, late fees, bounced check fees, daily fees, minimum balance fees, etc. And the average profit margin for the top 10 banks in the US are 18.5% compared to the top 5 payday lending companies in the country who are at 6.6%!! (PDF- source) And oh IHOP is at 12.6%. They are sure making a killing off our eggs and pancakes!! So really now, who exactly is profiting more?

But why haven’t banks and credit unions stepped up to write a similiar PD loan product?? Let’s look at why….
Consider the difficulties payday lenders face to stay in business under a law that limits their interest rates to 1.08% for a two-week loan. That is, if you take the new 28% yearly interest rate and divide it by 26, you get 1.08%, which is what lenders will be allowed to charge per every $100 they loan. Under the old Ohio law, they could charge up to $15 per $100 borrowed, or 15%.
So….. in case you are missing the point….
28% on a SHORT TERM LOAN IS NOT PROFITABLE!!!! For any business!

And oh yeah it’s not 391%. PD loans are 2 week loans, not 52+ week loans. Equating them with an annual loan product is absurd. If you rent a car at Hertz for 3 days, you pay $29.99/day…. Yet NO ONE computes what that cost would be annually b/c it’s only intended to be for a SHORT TERM!!



Payday Loan Stores Buying & Selling Gold

As payday loan stores continue to search for additional revenue streams by adding products and services to expand their product offerings the buying and selling of gold, silver and platinum is becoming increasingly popular.

In an effort to not only increase profits but additionally to offer consumers a variety of services that will appeal to them payday loan companies are beginning to buy and sell scrap jewelry consisting of gold, silver and platinum.

Some payday loan operators are reporting $5000 to $10,000 and more in increased monthly net profits as a result of this service.

With the economy presenting severe challenges for consumers in the U.S.A, Canada, Mexico and more this new service makes a great deal of sense. Startup costs are very minimal. Training consists of a 30 minute Webinar and marketing materials in both English and Spanish are available at no cost.

For example, Cashland Financial Services began their new program, paying cash for people’s gold.
The program is a first for a company that typically deals with payday loans and check cashing services.

Cashland Supervisor Jill Cvetanovich said their Wapakoneta location was among the first Cashland stores to start the program; just in time for the holiday season.
“If a person brings us an old necklace they’ve had and it’s broken and you want extra cash for Christmas, bring it in,” Cvetanovich said.

Cvetanovich said the gold will be tested to determine its karat weight.
She said Cashland will purchase the gold based on the daily market value for the karat weight.

Since the program began last week in select stores, Cvetanovich said the company has already bought $13,000 in gold. The Wapakoneta branch has made several sales, but Cvetanovich said anticipates more as word of the program spreads.

“There’s been quite a bit of inquiries made and we’ve had a few pieces sold in the store,” Cvetanovich said. “Obviously we’d like to have a lot more business, but we’ve done pretty well so far.”
Cvetanovich said nearly all of the 140 Cashlands across Ohio, Indiana, Michigan and Kentucky are to offer the program by the end of the month.

Interestingly, the buying and selling of gold, silver and platinum can be added to virtually any business seeking new revenue streams and new services for their clients.

For additional information go to Gold into


Record Payday Loan Profits

First Cash Financial Services Inc. indicated increased revenue streams from its pawn shop operations have resulted in a major uptick to its earnings expectations for 2008.

Headquartered in Arlington, Texas, First Cash Financial (NASDAQ: FCFS), which operates pawn, loan and check-cashing stores, has increased its 2008 earnings per share guidance to an estimated range of $1.24 to $1.26 per share from its previous range of $1.17 to $1.20 per share. The company ramped up its guidance by 35 percent. The majority of this revenue growth and projected profitability will occur in its pawn shop operations.

Obviously the current economy and 2009 projections are creating an increased demand for payday advances and pawn “instant cash” needs of customer of First Cash.

Year-to-date same-store revenue jumped 15 percent!

(See our last Payday Loan Newsletter at Payday Loan for our expectations for 2009 payday advance and auto title lending increased expectations.)

Revenue from pawn shop operations alone made up 78 percent of the company’s total quarterly revenue, First Cash said. (Further inquiry should reveal scrap gold buying and selling profits were a good portion of this. See Gold into for how to offer this revenue stream yourself.)

During the third quarter, First Cash posted a profit of $46 million, or $1.54 per diluted share, down from a profit of $10 million, or 32 cents per diluted share, during the same period last year. The company’s loss comes as it continues to holds its discontinued Auto Master automotive business unit, which it has offered for sale for several months.

A one-time charge of $52.6 million related to the discontinuation of the company’s auto loan business also was recorded in the most recent quarter, having an impact on the company’s final net earnings.

Once again payday loan fans, 2009 is going to be a year in which we will have significant opportunity to help the consumer deal with the screw ups on Wall Street!


Arizona Payday Loan Legislation

Arizona Proposition 200 was written by “Arizonans for Financial Reform” to ensure arizona consumers have access to multiple financial products.

Additionally, Arizona Proposition 200 will protect thousands of Arizona jobs and provide relief for commercial real estate owners who envision a very difficult 2009.

The last thing any state needs in these difficult times is higher unemployment, higher commercial vacancy rates, and a restriction on consumer access to funds!

For the facts, visit at: Arizonans for Financial Reforms