Public Policy
Advance America advocates for the continued availability of payday loans. We believe that our product, when used responsibly, provides an effective financial option for overcoming some of life's financial challenges. We work with state legislatures to implement reasonable regulations, which are in the best interest of our customers and the payday lending industry, while preserving access to funds for consumers who need financial flexibility.
Advance America, and other responsible payday lenders, have worked with state and local officials across the country to craft regulations to address situations involving customers who misuse our product and put themselves in financial jeopardy.
As a leading voice in the industry, Advance America promotes high standards and responsible business practices.
Cash Advances and Other Financial Options
We believe that, compared with the cost of late fees on a credit card or bounced check, utility reconnections (and even many ATM withdrawal fees), the flat fee of a cash advance can be a reasonable and practical choice. In addition, unlike bounced checks and late payments, a payday cash advance is not reported to credit service agencies, so credit scores are not affected.
APR Caps and Fees for Cash Advances
Most states regulate the fee that companies charge for a cash advance by one of two means:
- A flat fee per $100 of the amount of the advance
- A percentage of the advance
We believe these two methods are the most appropriate way of assessing a fee on the payday service.
Demand for Cash Advances
The proliferation of cash advance stores is evidence that there is demand for our product. We offer a product that many other financial institutions decline to offer.
A payday advance is designed for short-term borrowing by anyone with a steady income. We do not subject our customers to a credit check or take an inventory of their assets. We believe our customers often seek payday advances as a means of protecting their payment history and credit rating.
Advance America offers a simple financial option that can give an individual or a family some breathing room for a short period of time, and the means of avoiding the long-term negative consequences of missing payments to other financial institutions or the spiral of long-term credit-card debt.
The amount borrowed is based on a customer's income; the advance is relatively small and the duration of the transaction is short, so the ability to repay is well within the means of even people experiencing some level of financial strain. Our customers are allowed to borrow up to 32 percent of their gross monthly income; this limit provides a level of customer protection against the temptation to borrow more than can be repaid.
Our customers have an open and active checking account and show proof of a steady source of income. Moreover, if a customer requests additional assistance, we will work with the person to pay back the advance without incurring additional fees. For example, Advance America offers an Extended Payment Plan for those who cannot pay back an advance in the timeframe of the original contract; the plan is disclosed to all customers and involves no additional charges.
Advance America has raised the standard of professionalism in the industry and will continue to provide a safe, private and dignified option for customers seeking short-term advances. In fact, 92 percent of customers say payday cash advance is a useful service. And state regulators report very few complaints out of millions of transactions.
Cash Advances for Members of the Military
We have the highest respect for the men and women of the military, and of the enormous sacrifice they are making during this time of war.
Some members of the military contend that payday advances and other short-term financial options may affect military readiness. While we disagree with the Defense Department's assertion, we are deeply committed to supporting our troops in any way possible and thus made the conscious decision to stop offering our product to them effective October 15, 2006. In doing so, we regret that they are effectively denied a valuable credit option and may have to resort to more risky financial options like additional credit card debt or bouncing a check that would adversely affect their financial solvency.
Advance America does not target members of the military. Before we announced our policy to stop servicing military personnel, our statistics showed that they represented less than 1 percent of the Advance America customer base and only 42 of our 2,728 centers are located within 1 mile of any military installation.
