Payday lending has grown by leaps and bounds over the years as evidenced by the billions in payday loans taken out by borrowers annually. As payday cash advances have become more popular with the public, so has their scrutiny with state governments. Recently, Advance America Cash Advance became the latest target of fast cash loan politics. Advance America is the largest cash advance lender in the nation with locations spanning every nook and cranny of our great nation.
Advance America was also one of the founding members of the Community Financial Services Association of America (CFSA), the payday industry’s premier trade association of payday loan lenders. Their membership has over thirty-five hundred payday retail locations countrywide. As the most vociferous critic of any free market obstructions proposed by lawmakers to impede the ability of consumers to make their own choice with regards to payday loans, Advance America has now become the most prominent target of government payday lending oversight.
As the company is under the government heat lamps for allegations of exploitation of its customers, it sees its interests circumvented by state legislatures in some parts of the country. Virginia became the latest state in the union to take on the payday industry. Virginia has proposed several payday loan industry reforms, most prominent one targeting payday interest rates. One of the proposed bills would cap annualized interest rate caps at thirty-six percent.
The passage of this bill would effectively slowly starve off the Virginia payday loan industry, as similar measures have been done in other states. However, the payday industry is fighting for its existence in the state. The industry’s trade association, CFSA believes Virginia’s measures are unjustifiably strict and without merit.
The association has argued that prohibiting consumers from getting the short-term personal loans leads consumers to pursue more expensive credit options, such as high bank overdraft fees or exorbitant interests on cash advances from credit cards.
The association points to studies which show, that states that have either banned or restricted cash advances have seen higher cases of bankruptcies due to people being unable to access payday loans. But payday consumers do have a choice in the form of online payday advances or faxless payday loans. The online payday loan is a faster alternative to waiting in lines at payday stores.
Of course, CFSA and Advance America aren’t being completely obstinate; they are attempting to find a resolution to the Virginia cash advance imbroglio. They say that they are willing to work with state lawmakers, including Virginia to find a palatable resolution to any payday matter. It will be interesting to see if Virginia and the payday lenders can hammer out a compromise.