Cashcall.com, loans that fit your lifestyle, is a great example…of horrible business practice. I saw an ad for cashcall.com while I was watching a program that I recorded. I paused when the terms of the loan(s) appeared on the screen. Below is the screenshot (click on the image for a full-screen display). Cashcall

That’s right, the average APR on a loan of $2,600 dollars is 99.25 percent. 99.25% APR.

I did some further investigation on this company. First, I went to the company’s Web site. Then, I looked at the careers section of their Web site. Here is a link to one of the positions they posted yesterday. I called Adolph, the contact person for the position, and asked him how the loans work. He very frankly replied, "the interest compounds daily." So, not only do you have an unbelievably high APR, but you also get the accrued interest on your loan compounded daily. This is a one-sided business. One wins. One loses. It’s a blowout.

On a related note, below are some statistics on the payday loan industry that I found on Wikipedia.

  • Stephens Inc. estimates that in 2006, the payday advance industry extended credit to 19 million U.S. households. There are an estimated 24,200 locations offering payday advances across the country, employing more than 50,000 people.
  • Stephens Inc. estimates that storefront payday lenders have an
    annual loan volume of $42 billion. Internet payday lenders have $5.65
    billion in loan volume.
  • There are an estimated 24,400 storefront locations offering payday advances.

The numbers for this industry are astonishing.

The Big Deal: In a world of businesses and people driven by profit, how will you differentiate your business when consumers doubt the friendly face that every business in your industry puts on?