Payday Lenders Converting to Small Loan Stores

Nov 30th, 2009 @ 11:32 AM by Debbie Dragon

Tennessee-based payday lending company, Check Into Cash, is converting some stores over to small loan businesses. According to South Carolina’s homepage, The State, twelve of the South Carolina Check Into Cash stores are changing over by the first of 2010. The other remaining CIC stores will be closing indefinitely. South Carolina’s 12.1% unemployment rate is also having a great impact on the payday loan business, considering the concept of a payday loan doesn’t work when many people don’t have jobs.

The General Assembly has recently placed new operating restrictions and regulations on payday lenders. It’s too early to say if this will become the new way for payday lenders to bypass new restrictions for how they can do business. Some of the new restrictions going into effect as of 2010 include only one payday loan at a time and a limit of $550 per loan.

By converting into a small loan lender, they can offer longer-term consumer loans than was permitted through payday loans. They will now be monitored loan stores with the ability to make loans from $500 – $700 for six to twelve months with varying interest rates for payments; most likely higher rates of interest than before.

Many consumer advocates and legal firms see these business conversions as just one more way the payday loan industry avoids rules and regulations placed on them.

Once converted over to a small loan lender, they no longer have to require an applicant to have a job, so long as they have proof of some source of income, even if on an irregular basis. As a small loan lender, they also won’t be restricted by the rule of only one loan at a time, which can be problematic for those getting loans while unsuccessfully job hunting. This is why it’s highly recommended you pay off your current payday loan before securing another loan.