Benefits and misconceptions about payday loans.
Read more: Local, Business
MARQUETTE -- Payday loan companies have been in existence for about fifteen years, and sometimes there is a stigma attached to their business. However, many people definitely feel a need for small, short-term advances that most banks don't offer, particularly to those with bad or no credit.
All cash advance agencies must be licensed by the state and are subject to monitoring to insure proper operating practices. They also fall under the purview of the Truth in Lending Act, which means they must disclose any fees or interest rates charged to their customers. Also, they no longer allow people to roll over their loans, which protects consumers from getting in over their heads in debt.
"The law stipulates that they are not able to roll the loan over," said John Madacey, owner of Check and Cash of Marquette. "The loan must be paid."
As for fees that many credit card companies charge when the balance isn't paid on time, Madacey claims that payday loans are often more reasonable in the long run, even though they include charges of their own. Madacey said that customers would be paying a lot less interest in the long run through a cash advance, as opposed to letting the balance and interest on their credit cards grow.
Payday loan institutions can also mean good news for those with damaged credit. Not only is it easier to get approved for a smaller loan, but most cash advance agencies can actually help you re-establish credit. Many locations offer rechargable credit cards endorsed by major companies and will also provide letters of recommendation for customers in good standing who are looking to make larger purchases outside the scope of payday lenders.
"Their credit improves with us, and we can attest to their credit-worthiness if they come in," Madacey said.
Many of the nearly 30,000 stores across the nation also offer services like electronic bill pay and wire transfers, which make them convenient solutions for more than just cash advances.
In the end, payday loan agencies are an option for many of us--they just need to be used wisely.
