Payday Loans Cash Advance Consumer Guide

The objective payday loan and cash advance consumer resource

   

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Payday Loan and Cash Advance Industry Facts


About the payday loan and cash advance industry

 

At 2005 yearend, analysts estimated that there were between 23,000 and 25,000 payday loan outlets in the United States conducting $40 billion in loans, with $6 billion in loan fees paid by consumers. Payday lending has grown very fast  over the last few years. In 2000, the industry consisted of 7,000 - 10,000 payday loan offices, accounting for 41 million transactions and $1.4 billion in fee revenue. By 2003 yearend, there were about 22,000 payday offices generating $6 billion in fees, and around 100 million transactions. Total sales grew from $10 billion in 2000 to $40 billion in 2003. In short, the payday lending industry quadrupled in size within three years.

 

The tremendous growth in the payday industry has been fueled by extremely high profits: an estimated 34% pre-tax return. Payday lenders only need a small amount of cash to make profitable loans. After the first loan, the borrower is simply re-borrowing the money they just repaid, minus the service fee. Lenders charge annual interest rates of 400% or more. In comparison, the highest credit card rates rarely exceed 29% APR -- less than one-tenth the APR charged on a payday loan.