In Georgia, the payday loan industry has had a tough time. In 2004, the Georgia General Assembly handed the cash advance industry one of their biggest defeats, they closed down the industry in Georgia. The cash advance payday loan industry suffered millions of dollars in lost revenue. They industry came to battle again in Georgia earlier this year with the sponsorship of a bill that would have opened Georgia upto the industry again. However, the Georgia legislature upheld the previous ban and the new bill was narrowly defeated. The onslaught on the payday lenders is not new nor is the Georgia experience unique.
In June 2007, the state of Oregon became one of 13 states to put into place strict guidelines that effectively spelled the doom for the industry in the state. The payday loan industry makes short-term personal loans to borrowers, to hold them over till the next pay period. The next pay period is when the loan is due. Many consumers in need of quick cash or emergency funds seek out payday loan stores or online cash advance to access funds.
In many instances, the consumers don’t have accounts with banks and credit unions; even if they did these financial institutions don’t provide small short-term loans. Many millions of consumers rely on payday loans to meet their needs.
Unfortunately, there are consumers that get too comfortable with the ease of access to these funds. In many states where there are no payday locations, consumers use two alternatives to access quick cash advance:
1. Online payday advance that are no fax payday loans or faxless payday loans.
2. Cross the state border to a state that has cash advance lending
Millions of Americans are logging online to get payday cash advance Loans. This phenomenon has only grown in the last few years. The industry had a huge growth spurt in the 1990s and with the popularity of e-commerce, has grown to have a substantial web presence.
The huge web presence has made getting a payday loan convenient for many consumers. Instead of going to a store location, consumers can go online, fill out a short form and have their cash deposited in their account within 24 hours.
The restrictions at the state level have an impact on the traditional brick and mortar locations but negligible difference on the online payday loan sites. To avoid the thirteen states that have strict regulations against payday loans, lenders with online presence may have their businesses based in the other thirty-seven states.
The payday industry is in the midst of a transition. It will be interesting to see how the cash advance industry transforms itself in the future to meet the demands of their customers and the government.