Five Facts about the Business of Payday Lending
January 27th, 2012
- Today there are about 11,000 Starbucks in the United States but 19,700 payday loan stores. There were 2,000 payday lending stores in 1996.
- Lenders made $29 billion in loans last year.
- Location matters, and it’s getting harder to find a good location. The meta-story about payday is that state legislatures across the country are coming to grips with the significant negative externalities associated with these stores. But the other element is that there are only so many new strip malls opening up in run-down parts of town. The “good” spots are taken. The payday people may want to expand, but they are not in a panic, either. This is because stores become more profitable as they become more established.
QCCO says it expects to open no more than ten new “branches” in the next year. Given that they closed 66 branches in 2009 and 2010, while only opening four new branches, the market seems to be saturated. - As payday shrinks, the bad money is moving over the buy-here-pay-here. QCCO has begun to buy new BHPH lots. First Cash saw the opportunity back in 2006.
- In its most recent 10-k, Advance America reports that the company served approximately 10 percent fewer customers than they did in 2008. Of interest was also the notice that the company became a registered second mortgage lender in Ohio.
