This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Payday Lenders Face Greater Oversight

Stocks in this article: AEA FCFS DLLR CSH

Payday lenders have already had to shutter operations in areas operating under new rules. For instance, Advance America (AEA) closed 190 stores in 26 states and the United Kingdom, while QC Holdings (QCCO - Get Report) cited forcibly discontinued operations as a reason for lower revenue in its latest quarter. The payday sector isn't immune to the recession, either, facing higher credit costs just as surging unemployment has hindered borrowers' ability to repay debt, at any interest rate.

Dollar Financial (DLLR - Get Report) CEO Jeff Weiss recently noted that, while most of the company's customer base is employed in non-discretionary jobs, like "stocking shelves in grocery stores and supermarkets...with unemployment rates near 10% in all of our markets, a segment of our customer base has been moderately impacted by job losses, furloughs, and a reduction in working hours."

The regulatory crackdown and economic turmoil have fostered a few trends. First, payday lenders are shifting their focus to pawnshop operations, rather than outright loans. They are also expanding abroad -- particularly in Mexico -- with Washington making consumer protection a priority.

Another trend is charging higher fees in payday-friendly states until the federal regulation is passed, as well as boosting the cost of non-lending services, like pawning.

While QC Holdings deals with branch closures and higher credit costs, Chief Operating Officer Darrin Andersen says "maximizing profitability at each branch is a primary goal."

Payday lenders offer an assortment of services to those in need of quick cash. Customers can cash checks; get advances on paychecks that are coming in a week or two; receive title loans for cars; or pawn personal property. Some companies also have "rent-to-own" furniture programs.

2 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs