Has anyone heard anything about the line of credit that Advance America has started to offer? From what I understand, the line of credit is up to $750 and you make monthly payments to pay it off. There is supposedly no interest charge, which I find hard to believe. I know that Virginia did have some new payday loan laws go into effect on January 1. Anyone have any info on this?

Hmmm...are they offering that in all states? Haven't heard anything about it where I live. And them not charging interest is hard to believe...

I googled "Advance America line of credit". It seems they offered this in PA back in 2006. There was a monthly fee. The state ended up suing them over it.

Part of the article is here

Another article here

I think it is high end loan where it all looks good in the front but in the dark back end you end up paying three times the loan, I mean "Line of Credit", in fees.

I think they are just trying this scam in other states now.

There are a couple girls in my office who have done this. One girl is who was telling me the details. She said she pays $50 a month to repay this line of credit and if she needs to, she can access it at any time. I know Virginia recently passed law so that only 1 payday loan is allowed at a time and also some new laws on reborrowing. An article I found said that this was a way around the laws. That they are offering this instead of the payday loan.

I'm sure that there is an interest rate attached to it - can't believe it wouldn't be. I have been thinking of calling just to get the info and see what the deal is.

Installment Loans are replacing PDL's in many states because of all the new laws that have changed or will change in the future. The sunset law for AZ is 2010 meaning goodbye PDL's but probably unfortunately hello to installment loans that will still trap people in a sea of debt. These companies have made so much money they are becoming creative in states where they are licensed as PDL's. It is all about the money and how much they can make. I do realize as a consumer it is my responsibility to only borrow money I can repay but I had to learn the hard way. Some people are so desperate they only live in the moment, when it comes time to repay the vicious cycle starts and they are trapped.

kfstaff24,

You are correct about the evolution of the industry, but not facing the reason. The reason that there has been a growth of PDL store is based on demand. That is also the reason that there must be an evolution of the product. Do you really believe that if the state or federal governments completely eliminated PDL's that society and the consumer would be in a better position? If you answer anything other than no, you are living in a sheltered world.

The product was created when the banks began growing in the late 80's and early 90's. This growth resulted in the "my banker will help me" mindset changing to "my bank only looks at the bottom line". The change meant that a person could no longer walk into their bank, speak to thier banker and get a couple hundred dollars to tide them over. The product was not new, just moved from one entity to another. With this move, there were regulations that were put into place to protect both the consumer and the lender, while being overseen by the state in which the PDL operated.

Fastforward to today. The demand is now higher than ever. The internet was invented (by Al Gore!) and became a mainstream method for many things including PDL's. The states are now getting a bright idea to get rid of the "evil Payday Loan Stores". Unfotrunately, they cannot see the forest thru the trees. By creating laws that outlaw/ban/eliminate legal lenders, they are forcing the consumer to go to the one place that has caused more issues that the banks or legal lenders, the internet. The industry will evolve and the consumer will now begin to give their banking information to some anonymous company at the other end of who knows where and when they get into trouble, the state cannot and will not do anything to assist because it is illegal in your state. They cannot contact the offending company due to no registration, they cannot get your money back due to no authority and in the end, the consumer will suffer. Studies have been completed in the states that were "victorious" against the legal lenders and the results were increased BK's, defaults, late payments and an increase in NSF fees received by the banks.

The facts from the industry are that approximately 95% of the customers pay thier advances on time and have no issues with the service. The flip side of that is that the 5% that don't tend to have a large number that do not want to acccept responsibility for thier situation and inturn blame thier poor management of thier finances on everyone else. They are also the ones that "scream" the loudest and then get heard. They then fulfill the prophecy of the "exception becomes the rule". Kind of like here, since this forum attracts people that have had issues with PDL's, which is a small sample of the "real world", then everyone in the "real world" must have the same issue.

In the end, are there bad lenders out there? Yes!!

Are they the exception or the rule? Currently, the exception.

Will the exception become the rule? If the current trend continues and more states eliminate the product, the "bottom feeders" will have more food and get bigger and bigger with no regulation to control them in the world of the internet.

Make yourself educated on the products and lenders out there and go with a LEGAL lender if you need a loan. In the case of the OP, if you need to borrow, I would feel comfortable with Advance America for 2 reasons, they are licensed and they are a publically traded company with many checks and balances to protect the shareholders and customers.

BTW, sorry for the rant, but everyone needs to be very careful with what they wish for because you may be hurting the very people that need the help the most!

PDL Owner does have a valid point. Ohio has new laws as well and alot of the store front PDL companies went out of business or consolidated their offices. I see alot of empty storefronts in Ohio now because they couldnt afford the new laws and they no longer do payday loans here. They call them Installment Loans. Although working at a bank, installment loans are something that is paid over a period of time. Not paid back all at once. That type of loan is called a Single Pay Note. Calling them Installment Loans is deceiving to the consumer who actually knows what the word 'installment' means. Also, you cant stereotype everyone who comes to this forum as people who are irresponsible. People come here for help because they have no one else to turn to. Look at the current state of the economy. People are losing their jobs! How is it that person's fault that they have to close their account to keep PDL's from taking what little money they have left to feed the kids, buy medicine, or pay their rent???? They weren't irresponsible. We know who is really at fault for the way the economy is turning out.

__________________
aminah

PDL Owner as always I respect and very much appreciate your input. We are on two opposite sides of the fence here, you own and manage your business and I am certain you do a great job however, I believe these loans are designed to benefit the lender and not the borrower. I do not live in a sheltered world, but I did for the longest time (and still) live in the world of PDL hell. I have worked hard to re-establish myself and regain control of my finances. As I acknowledged above as a consumer it was my responsibility to borrow responsibly and I failed.

I must not be the only person who thinks this way as the bill to reform the PDL industry was over whelmingly defeated in Arizona!!!! My advice to anyone considering a payday loan if you cannot afford to borrow and pay right back and walk away dont take out a loan. I am educated on the products and I can tell you this some of the legal lenders have been harder to work with than the illegal ones. Not to rant like you said but I wish, hope, pray and dream that the industry goes away in Arizona because I believe people are being hurt in more ways than one. I have done without just to get back on my feet and now that this has happended to me if I had just done without when I went and borrowed money I would be alot better off today.

As crazy as it sounds, I would love to see the day that the market determines that there is no longer a need for my service, but I do not see that happening becuase of the people that we assist thru tough times. Most of our customers understand, appreciate and use the service as it is designed. On the other hand, they are the same ones that would be hurt the worst if state government was to continue on their path of "protecting the consumer". When there is a need and demand for a product or service, they cannot come in and turn the need/demand off by signing a new law onto the books. The resulting chaos is destructive beyond belief, as will be witnessed in Ohio over the next 6 months.

I do not know your story, but if I were to guess, you had 8-10 loans out and kept thinking that I can pay the fees so it is OK. Actually, the average customer has 3 loans or less. Approximately 25% of our current customers (as of 1/7/09) will pay thier advances off in the next 21-45 days and will not borrow again until April or May. Still yet, there are many customers that utilize the service 2 or 3 times a year and around the holiday season.

My point is to not penalize the masses for the mistakes/misfortunes of the few.

You are the exception to the rule on 2 fronts:

1. You got in over your head with too many loans (speculation).

2. You managed to get out of the hole and back on your feet without "screwing" anyone out of thier money.

Just to restate again, do you really think that creating laws to make PDL's illegal in AZ is going to get rid of PDL's on the internet in AZ? All that will happen is that the illegal lenders will spend more money buying SPAM emails that target AZ and make it tougher for anyone to protect the consumer. The answer is not to ban PDL's, the answer is to make a consistent regulation that creates the same fee and loan amounts for every state. This would place the consumer in a position of power if they need to borrow and would force the illegal lenders to comply with fees and practices.

This actually looks like it could continue into a pretty good dialogue. Could one of the Mods pull this discussion out and start a new thread since some are getting upset about getting off topic.

Here is the info from Advance America's web site about the Line of Credit:

LOAN AMOUNT IN VA 100 200 300 400 500 600 700 800 900 1000
Cash Advance Fee / APR * $26.40
688.29% $47.80
623.11% $69.20
601.38% $90.60
590.52% $112.00
584.00% - - - - -
Line of Credit Fee / APR ** - - - - $125.00
365.00% $150.00
365.00% $175.00
365.00% - - -

*The fee and APR include a loan origination fee of $20 for every $100 borrowed and a verification fee of $5 plus interest at 36% assuming a 14 day term and that the fee is financed.

Other loan amounts may be available.

** The fee represents interest on the maximum amount you could obtain under the line of credit assuming a 25 day billing cycle, ACH authorization, and that the maximum amount is outstanding at the end of a billing cycle.

I'm not sure I understand the phrase 'that the maximum amount is outstanding at the end of a billing cycle'. Still looks like PDL but with a somewhat lower interest rate.

PDL owner you are close on number 1 and correct on number 2.

To answer your question, I do believe all states not just AZ would be better off without PDL store fronts. In AZ they are practically on every corner. As far as internet lenders go if they choose to operate without a license they deserve what they get from consumers who do not pay them. I felt a moral obligation and paid them all the princiapal I borrowed.

If the governing bodies of all states would do their job and go after these internet based illegal lenders you would see some of this nonsense stop. I have read stories in newspapers, magazines and on the internet about about families devasted by payday loans. Though I appreciate your opinion and I know you understand mine, I will never advocate payday loans, installment loans or any type of loan that requires post dating of checks or any ach debits on a bi-weekly basis to a checking account. Like I mentioned above these loans are designed to benefit the lender and not the borrower.

The problem with the illegal lenders is that they do not care about the law. You can create all of the laws that you want to make them illegal and they will still make loans to anyone that applies whether it is legal in their state or not. As for people not paying back what they borrow, it is all a numbers game whith these guys. You can tell this from the collection practices that the illegal lenders utilize. If they loan 100 customers and 25% don't pay them back, 75% of them did! That 25% number is not made-up and is actually low for the illegal lenders. It is a huge number compared to a store-front, but a cost of doing business for internet. Also, remember that many of the illegal lenders are charging $25-$30 per $100, that is almost double the national average in a store-front.

Based on those numbers, the anonymity of the internet and the ability to rapidly morph your business to a new name in minutes, there is no way to regulate the internet lenders out of business that want to violate individual state regulations. The only way to lessen thier impact is to create a climate that allows the legitamate lenders to survive, comply with state regs and be audited by the states on a regular basis. If the consumer knows that the going rate is $15-$17 per $100 and they go online and are offered $25-$30 per $100, it becomes "buyer beware" as it is not the consistent approved rate nationwide.

As I stated before, each time a state changes regulations to eliminate PDL's, they are also eliminating any ability to assist the consumer when they get into trouble.

Congratulations on being out of borrowing! Surpringly, I love to be able to tell customers that because it means that their lives have made a dramatic financial change for the better!!

As for PDL's on benefitting the lenders, I do not agree and I can guarantee that most of my customers do not agree. Granted, anytime one goes into business, it is to be profitable. You make the statement like ther is no good purpose for PDL's, but actually they are like anything else that has multiple uses.

Cars kill people, should they be banned?
Knives kill people, should they be banned?
Guns kill people, should they be banned?
Credit cards create debt, should they be banned?
ARM mortgages adjust to absurd rates, should they be banned?

The answer to all of those questions is no. The reason being that each of them have a valuble purpose when in the correct hands and not abused. The same with PDL's.

Well to be fair...

People can not drive two cars at the same time.

People usually do not stab someone with more then one knife at the same time.

People usually do not shoot people with more than one gun at the same time.

Now when it comes to lenders you can have more than one credit card, mortgage and PDL loan.