PDL Assistance, Inc

Advance America's Shares Dip on Closures
Shares of Advance America Dip As Company Announces More Than 100 Store Closures

NEW YORK (Associated Press) - Shares of Advance America Cash Advance Centers Inc. slipped to an all-time low Friday after the payday lender said it will close more than 100 stores, mainly because of regulatory clampdowns in two states. The Spartanburg, S.C.-based company said it will close 31 stores in Pennsylvania and 45 stores in Oregon. This decision stems from a Pennsylvania ruling suspending payday lending in that state, and an Oregon law limiting fees and interest on payday loans.

Advance America issues payday loans, or short-term loans to be repaid on the customer's next payday. These loans are typically issued to people with low incomes, and have attracted scrutiny from lawmakers concerned about allegedly predatory and usurious lending.

Advance America said it assumes it will not collect most of the $10.8 million customers owe in those two states. It will cost $4.6 million to close these stores, plus 27 other stores that are losing money in various states. The company's stock dipped 79 cents, or 6.9 percent, to $10.70. The shares earlier touched as low as $10.48, the cheapest trade since the company went public in 2004.

Payday Loans = Costly Cash

"I just need enough cash to tide me over until payday."

"GET CASH UNTIL PAYDAY! . . . $100 OR MORE . . . FAST."

The ads are on the radio, television, the Internet, even in the mail. They refer to payday loans - which come at a very high price.

Check cashers, finance companies and others are making small, short-term, high-rate loans that go by a variety of names: payday loans, cash advance loans, check advance loans, post-dated check loans or deferred deposit check loans.
Usually, a borrower writes a personal check payable to the lender for the amount he or she wishes to borrow plus a fee. The company gives the borrower the amount of the check minus the fee. Fees charged for payday loans are usually a percentage of the face value of the check or a fee charged per amount borrowed - say, for every $50 or $100 loaned. And, if you extend or "roll-over" the loan - say for another two weeks - you will pay the fees for each extension.

Under the Truth in Lending Act, the cost of payday loans - like other types of credit - must be disclosed. Among other information, you must receive, in writing, the finance charge (a dollar amount) and the annual percentage rate or APR (the cost of credit on a yearly basis).

A cash advance loan secured by a personal check - such as a payday loan - is very expensive credit. Let's say you write a personal check for $115 to borrow $100 for up to 14 days. The check casher or payday lender agrees to hold the check until your next payday. At that time, depending on the particular plan, the lender deposits the check, you redeem the check by paying the $115 in cash, or you roll-over the check by paying a fee to extend the loan for another two weeks. In this example, the cost of the initial loan is a $15 finance charge and 391 percent APR. If you roll-over the loan three times, the finance charge would climb to $60 to borrow $100.

Warning on Internet loans
Consumer group says Internet payday lenders often hide costs of loans at up to 780 percent interest.
December 1, 2004: 11:06 AM EST

NEW YORK (CNN/Money) - The Consumer Federation of America has warned borrowers about the costs and risks of using Internet payday loan sites that make relatively small loans to consumers for short periods of time.

The non-profit association said Tuesday the loans typically cost $25 per $100 borrowed and must be repaid or refinanced by the borrower's next payday. That cost for a two-week loan works out to 650 percent annual interest rate (APR). But the consumer group says only 38 sites out of 100 surveyed disclosed the annual interest rates for loans prior to customers completing the application process. The most frequently posted APR was 652 percent, followed by 780 percent.
The group said that charges ranged from $10 per $100 borrowed up to $30 per $100 borrowed. Loan amounts generally range between $200 to $2,500, with $500 the most frequently offered.

The consumer group also warns that although loans are due on the borrower's next payday, many surveyed sites automatically renew the loan, withdrawing only the finance charge from the borrower's bank account and extending the loan for another pay cycle at the same high interest rate. Sixty-five of the surveyed sites permit loan renewals with no reduction in principal. At some lenders, consumers have to take additional steps to actually repay the loan, the group warned.

The group cautioned that the Internet payday lenders also demand contract terms from borrowers that the association considers unfair to consumers, including agreements not to participate in class action lawsuits, and agreements not to file for bankruptcy. Some lenders require applicants to agree to keep their bank accounts open until loans are repaid. Others ask for "voluntary" wage assignments even in states where wage assignments are not legal.

"Internet payday loans are dangerous for cash-strapped consumers," said a statement from Jean Ann Fox, the group's director of consumer protection. "They combine the high costs and collection risks of check-based payday loans with security risks of sending bank account numbers and Social Security Numbers over web links to unknown lenders."

CBS News Report Payday Lenders Or Loan Sharks?

http://www.cbsnews.com/stories/2004/10/08/eveningnews/consumer/main648331.shtml

Wikipedia Report
Payday loan

http://en.wikipedia.org/wiki/Payday_loan

Journal-News Report

http://www.journal-news.com/n/content/oh/story/news/local/2007/09/20/hjn092007lending.html

"Cashed Out: Consumers Pay Steep Premium to 'Bank' at Check Cashing Outlets"
Jean Ann Fox and Patrick Woodall, Consumer Federation of America, November 2006

"Internet Payday Lending: How High-priced Lenders Use the Internet to Mire Borrowers in Debt and Evade State Consumer Protections,"
Jean Ann Fox and Anna Petrini, Consumer Federation of America, November 2004

"Unsafe and Unsound: Payday Lenders Hide Behind FDIC Bank Charters to Peddle Usury,"
Jean Ann Fox, Consumer Federation of America, March 2004

"Rent-A-Bank Payday Lending: How Banks Help Payday Lenders Evade State Consumer Protections,"
Jean Ann Fox and Edmund Mierzwinski, Consumer Federation of America and USPIRG, November 2001

Borrowing From Peter to Pay Paul: A Statistical Analysis of Colorado's Deferred Deposit Loan Act,
Paul Chessin, Denver University Law Review, Vol. 83 No. 2, 2005

"Predatory Lending and the Military: The Law and Geography of 'Payday' Loans in Military Towns"
Steven Graves and Christopher Peterson, Ohio State Law Journal, Volume 66, Number 4, 2005 (Draft Article Version)

"Easy Prey: Evidence for Race and Military Related Targeting in the Distribution of Pay-Day Loan Branches in Washington State"
Assaf Oron, University of Washington, June 2005 (Revised March 2006)

"Easy Prey: Evidence for Race and Military Related Targeting in the Distribution of Pay-Day Loan Branches in Washington State"
Assaf Oron, University of Washington, June 2005 (Revised March 2006)

"Financial Quicksand: Payday Lending Sinks Borrowers in Debt with $4.2 Billion in Predatory Fees Every Year"
Center for Responsible Lending, November 2006

"Greed: An In-Depth Study of the Debt Collection Practices, Interest Rates, and Customer Base of a Major Illinois Payday Lender"
Monsignor John Egan Campaign for Payday Loan Reform, March 2004

"Payday Lending: A Business Model that Encourages Chronic Borrowing:"
Michael A. Stegman and Robert Faris, The Economic Development Quarterly, vol. 17, no. 1, February 2003

"Be Wary: Dependence on Debt Trap Presents Challenges for Effective State Payday Lending Regulation"
Yolanda McGill, Center for Responsible Lending, July 2, 2004

"New Terms for Payday Loans: High Cost Lenders Change Loan Terms to Evade Illinois Consumer Protections"
Woodstock Institute Reinvestment Alert, April 2004, Number 26