Cash Advance Payday Loan Companies Providing Much Needed Cash after Recession
At a time when millions of Americans are experiencing the worst financial hardship of their lives, payday cash advance lenders and pawn shops are thriving. Because major banks have drastically cut lending and credit card companies have made credit significantly more difficult and expensive to obtain, more and more citizens are turning to these alternative lenders to take out short-term loans, particularly payday loans, in an attempt to gain some financial breathing room for themselves. With a traditional cash advance loan, a borrower will typically write the lender a check post-dated to their next payday, normally two weeks later. When the day arrives, the lender will cash in the check, including interest and fees.
Although legislation regulating payday cash advance loans has been sweeping across the country and restricting traditional payday lending practices, these lenders' profits have been soaring since the recession began shutting consumers out of traditional forms of borrowing and credit. Now that these people have to find other means to get lending or credit, it comes as no surprise that they are turning to payday lenders. And now these lenders are truly seeing excellent growth and returns.
Daniel Feehan, CEO of Cash America, for instance, reported that his company's profits soared to $33.7 million in the fourth quarter of the year, which is more than doubled from last quarter. Other short-term lending companies are seeing comparable results. Cash American International stock is trading around $40, whereas First Cash Financial Services is trading around $22, EZ Corp. is trading around $21, and Advance America Cash Advance Centers is trading around $6. All of these figures, remarkably, are at or very close to 52-week highs for these companies. These lenders are also finding that more middle-income families are turning to payday lending or the like to obtain emergency financial help. Ken Compton, CEO of Advance America, the leading payday lender in the country with over 2,700 stores nationwide, has reported that "The median annual income of an Advance America customer has increased to approximately $50,000, and nearly 20% of our customers earn more than $75,000 annually."
Now that the recession has made the process of borrowing or obtaining credit near impossible, seeking alternatives in times of need is more than reasonable. The key is to remain informed and responsible. If you are considering taking out a payday loan, be sure to understand all the terms of the loan and make sure you are able to pay the loan back in time.