Cash Advance Loans

With the economy weakening and cash-strapped consumers living paycheck to paycheck, you’d think business would be booming at QC Holdings Inc., the Overland Park-based payday lender. You’d be wrong.

Business, mind you, is good. But there’s been no spike in revenue, despite the litany of bad economic news suggesting that consumers might be looking for quick cash fixes.

“I can tell you right now that we haven’t seen any growth in demand,” said Darrin Andersen, president and chief operating officer of QC, one of the country’s biggest payday lenders.

Andersen isn’t exactly sure why that’s so — the payday industry is relatively young and has no solid baseline against which to measure outcomes.

But he suggests several possibilities. Maybe the federal government’s stimulus checks have rendered the need for QC’s services unnecessary for now. Or maybe consumers, pessimistic about their economic prospects, are wary about debt.

And then there’s the competition. As the payday industry matures, companies like QC no longer have the field to themselves. Credit unions and banks now offer competitive products, not to mention businesses offering loans online. Last year, for the first time, QC’s number of payday stores nationwide actually declined.

“So as the economy has slowed, we have reached a plateau,” Andersen said.

It hasn’t helped, of course, that the payday industry has been vilified in the media and by consumer advocates as “predatory” and that state and federal lawmakers have sought to rein it in.

In recent years, more than 200 bills have been introduced in state legislatures limiting the fees that payday lenders can charge or effectively banning the businesses outright. And in 2006, Congress limited the interest rate and fees that payday lenders can charge members of the military to 36 percent annually, essentially banning the industry from that sphere, too.

It’s no wonder that QC and its industry cohorts feel under siege. In recent years, they’ve launched a concerted counterattack designed to portray the industry as consumer-friendly and filling a need not met by other financial institutions.

Typically, the rap on the industry has been that high finance charges suck borrowers into vicious debt cycles, often forcing them to take out a series of loans, each to repay the previous one.

“You come into a payday lender to take out a smallish loan, say $300 to $400, and you find yourself paying over the course of the year $1,000 or $1,200,” said Eric Vieth, a St. Louis lawyer who filed a pending class-action lawsuit in November 2006 against QC alleging it engaged in predatory practices. “And you look up and say: ‘Wait a minute, I still owe my $300. I’m not even denting the principal."

Source : http://www.kansascity.com/