Consumer Cash Advances or Payday loans are small-dollar, short-term, unsecured loans that borrowers promise to repay out of their next paycheck or regular income payment. Payday loans are usually priced at a fixed-dollar fee, which represents the finance charge to the borrower. Because these loans have such short terms to maturity, the cost of borrowing, expressed as an annual percentage rate, can range from 300 percent to 1,000 percent, or more
Hampden Group Holdings provides consumers with a safe and secure way to address financial shortfalls and emergency cash needs by offering payday loans over the Internet. These short-term loans, (typically 5 to 14 days), provides consumers with the cash they need without the credit checks and waiting period normally associated with traditional lending programs. Because the transaction is handled completely on-line, the customer isn’t required to visit a payday loan storefront, saving time and the aggravation of completing this process in-person.
How it Works
The consumer fills out an application for a payday loan on-line and our proprietary system uses the information to search several national databases to establish the applicant’s viability for repaying loans and transacting business in an ethical manner. Other information provided by the applicant is also verified, including employment and bank account status.
Once the applicant has been approved, they sign the loan contract and ACH authorization form and the money is deposited into their checking account. For loans that need funding quicker than 24 hours, Hampden Group Holdings optionally offers an ATM card that can be loaded in minutes. Having multiple cash transfer options for the consumer provides a level of service that differentiates the Hampden Group from other companies offering cash advances over the Internet.
When the loan is due, the total amount of the loan, plus fees, is deducted from the customer’s checking account. The consumer also has the option to extend, or make a partial payment, on the loan for an additional fee. When the loan is repaid in full, the consumer can request a new loan and the process repeats itself.
Who are our Customers?
Typically, payday loan customers have cash flow difficulties and few, if any, lower-cost borrowing alternatives. Payday customers tend to be frequent users of payday advances, often choosing either to "roll over" their credits or to obtain additional subsequent extensions of credit. Industry data indicates that the cash flow difficulties experienced by many payday customers are a long-term credit characteristic as opposed to a short-term temporary hardship.
A study by the Credit Research Center at Georgetown University's McDonough School of Business indicates that payday customers often rely on payday loans because they have either been turned down for other forms of credit or offered less credit than the amount for which they had applied. The study also indicates that payday advance customers frequently have other characteristics associated with credit problems or limited credit availability, including borrowing from a pawnshop in the past five years, filing for bankruptcy in the past five years, or making payments 60 or more days late on a mortgage or consumer debt in the last year. As a result of these characteristics, payday lending is generally characterized as a form of sub-prime lending.
