What Fully Disclosed Short-Term Credit Looks Like
Documents disclosing important financial services terms and fees too often mislead and confuse consumers. As a result, American consumers paid $14.3 billion in deceptive, unwanted charges in 2012, according to a new report from the online service BillGuard.
Recognizing the prevalence and gravity of these practices in consumer financial services, Advance America has a long-standing commitment to offering consumers affordable, reliable and fully disclosed short-term credit and to leading the financial services industry in consumer-friendly disclosure.
Our simple and transparent lending practices include:
Keeping our fees simple by charging a fixed, one-time fee, typically $15 per $100 borrowed. There are no additional or hidden, unexpected fees or compounding interest on our short-term loans – unlike other forms of credit such as credit cards or overdraft programs.
Disclosing this straightforward fee as both a dollar amount and an implied annual percentage rate (APR), even though consumers make decisions based on simple-dollar costs and APR is generally not an appropriate measure for short-term, small-dollar loans. This disclosure enables customers to compare the cost of our loans to that of other credit options, empowering them to make informed financial decisions
Describing our one-time fee and loan terms through our simplified disclosure document and simplified contract. Our center employees walk each customer through all terms and fees associated with their loan, making sure they fully understand this information before borrowing. Loan fee schedules and terms are clearly presented on the walls of our centers and on our website. Customers sign a simplified contract – a two-page, easy-to-read agreement, shortened from a lengthy and complicated legal-sized document – that outlines the terms, fees and dates associated with their loan in plain English.
In keeping with our tradition of disclosure and responsible lending, Advance America has recently introduced in most states its enhanced Simplified Disclosure, a single piece of paper designed to provide consumers even greater clarity. This straightforward document – a sample of which can be seen here – clearly lays out the obligations customers enter into when borrowing a loan, suggests alternative products for consideration and provides contact information for industry regulators. The Simplified Disclosure was informed by customer feedback and developed in close consultation with legislators and regulators.