Dispelling Common Myths
MYTH: Advance America could still operate profitably if they charged a much smaller APR.
FACT: Some of our critics have proposed capping interest rates for our services, but to do so would effectively ban cash advances.
- Lower fees would not generate enough income to pay for basic business expenses, such as rent, utilities and wages.
- An APR of 36 percent, as some of our critics have suggested, would mean customers pay a fee of $1.38 per $100 borrowed, or less than 10 cents per day for a two-week loan.
- No market-based provider – not a credit union, not a bank – can lend a short-term loan at that rate without being subsidized. Such rate cap models overlook the significant cost of operating a regulated business, and would be an effective ban on cash advances.
- Our customers recognize that the price of the one-time fee is appropriate for a short-term loan, relative to other options.