About Cash Advances 'Payday Loans'

What Are Payday Loans?

Payday advance provides a small, unsecured, short-term cash advance until payday. Clients choose payday advance to cover small expenses and avoid costly bounced-check fees or late payment penalties and other less desirable short-term credit options.

How Payday Loans Work

A client with an active checking account and a regular income simply:

1. Reads and signs an agreement that discloses transaction terms,
2. Writes a personal check for the advance amount plus a fee, and
3. Immediately receives the advance in the value of the check minus the fee.

The client’s check is held for an agreed-upon time period, usually about two weeks. At the end of that time, either the check is deposited or the client returns with cash to reclaim the check.

Uses For Payday Loans

Just as you understand that taxi services are valuable and convenient when used for short-term travel needs but are inefficient to use for long-term travel needs, payday advance services are economical and convenient when used for short-term cash needs.

PAYDAY LOANS ARE INAPPROPRIATE FOR LONG-TERM OR CONTINUING CASH NEEDS.

The payday advance product is a dignified and cost-efficient “financial taxi” to get from one payday to another when you are faced with an unexpected cash need.

These advances must be used responsibly and for the purpose for which they are intended, namely to solve temporary cash-flow problems by bridging the gap between paydays.

Payday advance clients make informed decisions and receive consumer protections under law and CFSA's Best Practices.

Millions choose payday advance as a dignified, discreet solution for temporary cash flow problems without asking family for money or pawning personal items

70% choose payday advance for reasons of convenience (quick, easy process & fast approval)

96% are aware of the finance charge & 78% recalled it being disclosed as an APR

92% believe payday advance is a useful service, only 12% were dissatisfied with last advance

33 states and D.C. provide balanced, responsible regulation of payday advance and CFSA member companies offer additional protections with stringent Best Practices.

• Educational brochure that encourages consumer responsibility, warns against long-term use and informs clients of consumer credit counseling alternatives
• Full disclosure on in-store signage and in loan agreement (with TILA disclosures)
• Privacy notice
• Limit on rollovers (or renewals)
• Cost-free right of rescission
• Professional, fair and lawful collection practices and no threat or use of criminal prosecution

NEXT: How Payday Loans Work

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