Payday loans target consumers with no credit history or low credit history. According to IBISWorld, an industry research firm, the check cashing and payday lending industry is expected to grow in the United States 5.1% in 2022.

These high-yield loans promise quick cash until the next paycheck, but they often create dangerous cycles of new loans to pay off the old ones, draining finances and impoverishing borrowers.

Some states impose interest rate caps or interest rate restrictions on this type of loan. However, the permissible interest rate can be exorbitant; For example, the California interest rate cap on a $100 14-day loan can be as high as 460% APR.

Today, consumers have some protection from this type of predatory lending by the Payday, vehicle title and certain premium installment loans rule by the Consumer Protection Agency. But an alternative form of lending known as installment loans is quietly emerging as a less regulated alternative to payday loans.

Payday Loans vs. Installment Loans

Payday loans and installment loans are similar in that they both offer a short-term solution when you need cash right away. The main differences between payday loans and installment loans are whether they are collateralized (that is, whether collateral is required to secure the loan), how much you can borrow, and how long you are given the loan repayment plus interest and fees.

Payday loans are usually a smaller amount, around a few hundred dollars, while installment loans can reach amounts as high as $10,000. Payday loans are also repaid in a lump sum by the borrower’s next paycheck period. Conversely, installment payments are paid off in installments over several months or years.

Although payday loans and installment loans provide a quick source of funding in an emergency, they often create further financial turmoil for already troubled borrowers due to high interest rates and high fees.

Payday and short-term loans

Payday and short-term loans are usually unsecured and do not require collateral. They are typically offered in amounts of $500 or less at interest rates of 400% APR or more, depending on your state’s regulations.

These loans must be repaid in full by the borrower’s next billing cycle. Some states allow lenders to renew the loan if borrowers need more time.

Other types of short-term loans are:

• car title loan. Auto title loans use your car’s title, or “pink tag,” as collateral for a short-term loan. You usually have 30 days to fully repay the loan; otherwise, the lender will take possession of your vehicle.
• pawn shop. These loans require the use of a valuable asset as collateral in exchange for a small portion of its resale value. If you don’t repay the loan, the pawnbroker keeps your assets.

Problems with short-term loans

When payday loans provide almost cash 12 million Americans in need and provide an estimated credit 11 percent of Americans who have no credit history, how can they be bad? The answer is complicated.

Payday loans allow lenders direct access to checking accounts. When payments are due, the lender automatically deducts the payment from the borrower’s account. However, should an account balance be too low to cover the withdrawal, consumers will have to pay an overdraft fee from their bank and an additional fee from the payday bank.

Getting a payday loan is easy – which is why many of them fall into predatory lending territory. Borrowers only need to provide ID, proof of employment, and bank account information. Payday lenders do not check credit, which means they are too often granted to people who cannot afford to repay them.

People who are constantly short of cash can get caught in a payday loan cycle. For example, a woman in Texas paid a total of $1,700 for a $490 loan from ACE Cash Express; it was her third loan that year when reported by Star Telegram.

When original loans are converted into new, larger loans under the same fee schedule, borrowers run into trouble due to high interest rates and fees.

installment loans

Installment loans are part of a non-bank consumer credit market, meaning they are issued by a consumer finance company and not a bank. These loans are typically offered to low-income consumers with poor credit ratings who cannot qualify for loans from traditional banks.

Installment loans range from $100 to $10,000. The loans are repaid monthly within four to 60 months. These loans can be secured or unsecured.

These are similar to payday loans in that they are intended for short-term purposes and are aimed at those on low incomes or those with poor credit. However, the two types of credit differ greatly in their lending.

Pew Charitable Trusts, an independent non-profit organization, analyzed 296 installment loan agreements from 14 of the largest rate providers. Pew noted that these loans could be a cheaper and safer alternative to payday loans:

• Monthly installments for installment loans are cheaper and more manageable. According to Pew, installment payments account for 5 percent or less of a borrower’s monthly income. This is positive considering payday loans often eat up significant chunks of paychecks.
• Borrowing through an installment loan is cheaper than through a payday loan. The Consumer Financial Protection Bureau found that the median fee for a typical 14-day loan was $15 per $100. However, according to Pew, installment loans are significantly cheaper.
• These loans can be mutually beneficial for both the borrower and the lender. According to the Pew report, borrowers can repay debt in a “reasonable time and at a reasonable cost” without jeopardizing the lender’s bottom line.

Installment loan risks

At first glance, installment loans are cheaper and seem safer for consumers. However, they come with their own risks:

• State laws allow two harmful practices in the installment loan market: selling unnecessary products and charging. Installment loans are often sold with additional products such as credit insurance. Credit insurance protects the lender in the event of the borrower’s insolvency. However, Pew claims that credit insurance offers “minimal consumer benefit” and can increase the overall cost of a loan by more than a third.
• The “all-in” APR is usually higher than the APR stated in the loan agreement. The “all-in” APR is the actual percentage a consumer pays after all interest and fees have been calculated. Pew lists the average all-in APR for loans less than $1,500 as up to 90 percent. According to Pew, the non-all-in APR is the only one Truth says must be listed in the Lending Act, causing confusion among consumers who end up paying much more than they initially anticipated.
• Installment loans are also often refinanced and consumers are then in turn charged non-refundable termination or termination fees. In addition, non-refundable processing fees are paid each time a consumer refinances a loan. As a result, consumers pay more for credit.

Other alternatives to short-term loans

If you need money, there are other alternatives besides payday loans and installment loans that you should consider. Here are some options:

• construction loans. These loans are designed for borrowers with little or no credit. The financial institution transfers lender funds to a blocked savings account that you cannot access until after you have made all of the loan installments.
• Alternative Payday Loans. Payday Alternative Loans, or PALs, are provided by credit unions for their members. These loans are available for as little as $1,000, which are repaid over a month or a few months depending on the institution.
• AAsk your employer for an advance. Some employers offer salary advances to their employees. Remember, if you advance part of your next paycheck, it means your next pay period will be a reduced amount.
• Negotiate a payment plan with creditors. Whether it’s a hospital bill or a credit card bill, contact your creditors to explain your financial situation. They may be able to tell you payment plan options that you weren’t aware of.

Short term loans may seem like easy solutions, but make sure you do your research to find the best option for your situation.

NEW YORK, February 3, 2022 /PRNewswire/ — Bernstein Liebhard LLP is reminding investors of the deadline for filing a motion by lead plaintiff in a securities class action lawsuit filed on behalf of investors who have purchased or acquired common stock of FirstCash Holdings, Inc. (the “Company”) to have. or “FirstCash”) (NASDAQ: FCFS) between February 1, 2018 and November 12, 2021, both dates inclusive (the “Class Period”). The lawsuit has been filed The United States District Court for the Northern District Texas and alleges violations of the Securities Exchange Act of 1934.

if you purchased or otherwise acquired FirstCash common stock and/or discuss your legal rights and options please visit Class action lawsuit brought by shareholders of FirstCash Holdings, Inc or contact Lisa Sriken toll-free at (877) 779-1414 or [email protected].

FirstCash owns and operates pawn shops in The United States and Latin America. Through its pawn shops, FirstCash offers non-recourse pawn loans and purchases goods from customers to enable them to meet short-term cash needs. In September 2016, FirstCash has completed its merger with pawn shop and payday lender Cash America International, Inc. (“Cash America”). In November 2013, Cash America had entered into a consent order with the Consumer Financial Protection Bureau (CFPB) for lending to insured military personnel or their dependents in violation of the Military Lending Act (MLA), which failed to comply with debt collection-related violations of problematic behavior due to insufficient prevent or identify in a timely manner internal compliance and failure to maintain required records (the “Assignment”). In the order, Cash America agreed to cease and desist from the violations and to implement a plan designed to ensure future compliance with the terms of the order. The CFPB fined Cash America 5 million dollars and ordered it to be deposited 8 million dollars into an account to provide relief to affected consumers.

According to the lawsuit, during the class period, the defendants made false and misleading statements and failed to disclose the following: (i) FirstCash had issued more than 3,600 loans to over 1,000 active duty military personnel and their families at exorbitant interest rates in excess of 36% and often in excess of 200% under violating the MLA and Order; (ii) FirstCash failed to implement the remedies required by the Order; (iii) FirstCash’s financial results were in substantial part the product of FirstCash’s violations of the MLA and the Order; and (iv) as a result, FirstCash faced a material, undisclosed risk of legal, reputational and financial damage if FirstCash’s violations of the MLA and the Order were ever to become public knowledge.

on November 12, 2021, the CFPB announced that it had filed a complaint against FirstCash for violations of the MLA and the Order. The CFPB complaint alleged that between June 2017 and May 2021 (the only period for which the CFPB currently has defendants’ transaction data) FirstCash and its subsidiary Cash America West, Inc. have collectively issued over 3,600 mortgage loans to more than 1,000 covered borrowers Arizona, Nevada, Utahand Washington. The CFPB found that FirstCash charged interest rates in excess of 36% on all of the loans in question, with rates often exceeding 200%. In addition, the CFPB found that FirstCash’s usurious lending practices have been ongoing at least since then October 2016, in violation of the order. A CFPB release detailing the agency’s actions against FirstCash said that FirstCash had deceived and stabbed military families and deprived them of the right to go to court.

As a result of this news, FirstCash common stock fell about 28% in the following two trading days, hurting investors.

If you wish to appear as lead plaintiff, you must call the court no later than March 15, 2022. A lead plaintiff is a representative party acting on behalf of other group members in conducting the litigation. Your ability to participate in a recovery does not require you to serve as lead plaintiff. If you choose not to take action, you can remain an absentee class member.

if you purchased or otherwise acquired FCFS common stock and/or discuss your legal rights and options please visit https://www.bernlieb.com/cases/firstcashholdingsinc-fcfs-shareholder-lawsuit-class-action-fraud-stock-479/ or contact Lisa Sriken toll-free at (877) 779-1414 or [email protected].

Since 1993, Bernstein Liebhard LLP has recovered $3.5 billion for his customers. In addition to representing individual investors, the firm has been retained by some of the largest public and private pension funds in the country to monitor their assets and conduct litigation on their behalf. Due to its success in litigating hundreds of court cases and class actions, the firm has been named to the National Law Journal’s Plaintiff Hot List thirteen times and has been included in The Legal 500 for ten consecutive years.

LAWYER ADVERTISING. © 2022 Bernstein Liebhard LLP. The law firm responsible for this notice is Bernstein Liebhard LLP, 10 East 40th Street, New-York, New-York 10016, (212) 779-1414. The lawyer responsible for this advertisement in the State of Connecticut is Michael S Bigin. Past results do not guarantee or predict a similar outcome with respect to future matters.

Contact information:

Lisa Sriken

Amber Liebhard LLP

https://www.bernlieb.com

(877) 779-1414

[email protected]

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NEW YORK–(BUSINESS WIRE)–The law firm of Kirby McInerney LLP reminds investors that a class action lawsuit has been filed in the United States District Court for the Northern District of Texas on behalf of those who acquired FirstCash Holdings, Inc. (“FirstCash” or the “Company”) (NASDAQ: FCFS) Common Shares from February 1, 2018 through November 12, 2021 (the “Class Period”). Investors have until March 15, 2022 to petition the court to be named lead plaintiff in the lawsuit.

FirstCash owns and operates pawn shops in the United States and Latin America. Through its pawn shops, FirstCash offers non-recourse pawn loans and purchases goods from customers to enable them to meet their short-term cash needs.

In September 2016, FirstCash completed its merger with pawn shop and payday lender Cash America International, Inc. (“Cash America”). In November 2013, Cash America entered into a consent order with the Consumer Financial Protection Bureau (“CFPB”) for lending to insured military personnel or their dependents in violation of the Military Lending Act (“MLA”) rules related to debt Collection, failure to prevent or timely identify problematic behavior due to inadequate internal compliance, and failure to maintain required records (the “Assignment”). In the order, Cash America agreed to cease and desist from the violations and to implement a plan designed to ensure future compliance with the terms of the order. The CFPB fined Cash America $5 million and ordered it to deposit $8 million into an account to redress the affected consumers.

On November 12, 2021, the CFPB announced that it had filed a complaint against FirstCash for violations of the MLA and the Order. The CFPB complaint alleged that “[b]between June 2017 and May 2021 (the only period for which the FBI currently has Defendants’ transaction data), [FirstCash and its subsidiary Cash America West, Inc.] collectively issued more than 3,600 mortgage loans to more than 1,000 covered borrowers from businesses in Arizona, Nevada, Utah and Washington.” The CFPB found that FirstCash charged interest rates in excess of 36% on all of the loans in question, with rates often exceeding 200%. In addition, the CFPB found that FirstCash’s usurious lending practices had continued in violation of the order since at least October 2016. A CFPB publication detailing the agency’s actions against FirstCash said FirstCash had “cheated” and “outstabbed” military families and “deprived them of their right to go to court.” As a result of this news, FirstCash’s stock price fell $7.50 per share, or approximately 8.7%, from $86.14 per share to a closing price of $78.64 per share on November 12, 2021.

The lawsuit alleges that during the class period, the defendants made false and misleading statements and failed to disclose the following: (i) FirstCash made more than 3,600 loans to over 1,000 active duty military personnel and their families at exorbitant interest rates in excess of 36%. – and often more than 200% – in violation of the MLA and the Order; (ii) FirstCash failed to implement the remedies required by the Order; (iii) FirstCash’s financial results were in substantial part the product of FirstCash’s violations of the MLA and the Order; and (iv) as a result, FirstCash faced a material, undisclosed risk of legal, reputational and financial damage if FirstCash’s violations of the MLA and the Order were ever to become public knowledge.

If you have purchased or otherwise acquired FirstCash securities, have information, or would like to learn more about these claims, please contact Thomas W Elrod from Kirby McInerney LLP by emailing [email protected] or by filling out this form Contact formto discuss your rights or interests in relation to these matters at no cost to you.

Kirby McInerney LLP is a New York-based plaintiffs’ law firm focused on securities, antitrust, whistleblower and consumer litigation. The firm’s efforts on behalf of shareholders in securities disputes have resulted in recoveries totaling billions of dollars. For more information about the company, visit Kirby McInerney LLP’s website: http://www.kmllp.com.

This press release may be considered an attorney’s advertisement in some jurisdictions under applicable laws and ethics rules.