The cash advance business is growing at enormous rates. You’ve seen these places popping up in all types of neighborhoods. These are relatively clean, well lit, innocent looking establishments. The new, improved breed of quick-cash ‘til payday operations look great on the outside. The personnel working in them are dressed professionally. But the usury style of business is the same as it’s always been.

Typically, they are offering very short-term loans to people, already in debt, who find themselves in a bind. Since they require no credit check, it can be a convenient way for a cash-strapped person to get needed cash today. Customers generally are required to show a checkbook, identification, their most recent paycheck stub and their most recent bank statement.

You’re asked to write a post-dated check, due in seven or fourteen days, for the amount of the loan plus the interest. A customer will pay around twelve to fifteen dollars for every hundred dollars borrowed on a two week loan. This doesn’t seem too much to pay when you’re in debt and in a cash bind.

The problems start happening when the consumer can’t pay. The companies will gladly extend the loan if the customer will pay the interest due, allowing more time to pay. More time passes and they keep paying high interest rates every time the loan is due.

Keeping the borrower paying the interest due isn’t a problem for the lender. Most of the clientèle have pre-existing debt problems and don’t want to incur the fees involved, should the lender run the insufficient check. The borrower finds themselves trapped for many months.

According to the Center for Responsible Lending, the average cash ‘til payday borrower pays $800 to borrow $325. They also point out; over ninety percent of the loans go to repeat borrowers.

APR rates, on the loans of the trapped borrowers, range from 275% to 375%. What the consumer thought was a simple, short-term loan to help their debt problem, spirals out of control. Some of the borrowers take out second and third loans from other lenders attempting to manage the new debt crisis, simply compounding the problem.