Home of The California Financial Service Providers

CFSP is the California Financial Service Providers Association. We are the trade association representing permitted check cashers and licensed Payday Loan businesses in California. We establish procedures and practices (called Best Practices) that our members agree to follow in dealing with their customers. The Best Practices specify customer protections to make sure they are being treated fairly and ethically.

A Payday Loan is also called a Cash Advance, Payday Advance, and a Deferred Deposit Transaction among other names. It is a way you can borrow money for a short term, typically until your next payday.

A Payday Loan is not meant to be a long-term credit solution.

You write a check to the lender and the lender will hold you check until it is due, typically your next payday. The lender will give you the face value of the check minus the flat fee he charges, which under California law is at most 15% of the face value of the check. When your check is due, the lender may ask you to come in and redeem your check with cash or deposit your check. If you do not redeem your check, the lender will deposit your check to satisfy your advance.

Under California law you can write a check for up to $300 to the lender. The least you will get back is $255 (if the lender charges the maximum 15% fee, which is commonly charged). Of course, you can borrow less money if you want. See the sign posted at lender's location or on their Web site for the fee they charge.

There are no restrictions on what you can do with the money you borrow. You can use it to pay bills, for a medical emergency, to repair your car, to take a vacation, and for other things. We recommend that you use it responsibly since you will need to repay it.

There are two parts that need to be addressed to answer with this question. The first part deals with the company issuing the Payday Loan: are they a licensed, legitimate lender? You can check to see whether the lender is licensed in California at the Department of Corporations Web Site. We recommend that you do so unless you already know that the company has a Deferred Deposit Transaction License (the license required for all Payday Lenders to hold if they do business in California, even over the Internet). The requirement to be licensed in California even applies if the company is based in another state or another country. If the company you want to use is licensed in California, you will be protected by California law. Otherwise, you may have little or no legal protections in dealing with a company not licensed in California.

The second part of the answer deals with the protection of any personal information, including bank account information, you might be requested to provide the lender. We recommend that you look at the lender's Privacy Policy on their Web site to see how they treat your private information. If you cannot understand their Privacy Policy or have questions about it, we strongly recommend that you contact the lender directly to get your questions answered before you provide any of your private information.

If you are at a store or on a Web site, look for the CFSP Logo just like the one in the upper left of this page. Also, you can verify that a company is a CFSP member by looking at our Member Directory (coming soon) on this Web site.

APR stands for Annual Percentage Rate. It was developed to allow consumers to be able to compare the interest rates of different types of loan products using a single number. In other words, its intent was to give consumers a simple way to compare loans with up front fees or points, interest rates that change after a few years, balloon payments, and other variations against other loans with a different set of features or lengths of the loan. APR works well for comparing different long-term (over a year) loan products against each other.

For a short-term loan with a single, flat fee charged, like a Payday Loan, the APR calculation is dominated by the length of the loan. This means that the longer the loan, the lower the APR. Conversely, the shorter the loan, the higher the APR. Thus, the APR changes dramatically depending only on how long the loan is for — the fee paid for the loan is constant no matter the length of the loan. However, the APR can change by over 30 times depending on the length of the loan.

Confused about what a Payday Loan APR really means to you? Here's the simple way to think about it —

• A Payday Loan is meant only to solve a short-term cash crunch;
• A Payday Loan may be more expensive than a bank loan, if you can get one;
• A Payday Loan offers a reasonable alternative to ruining your credit rating because you didn't pay bills on time – bad credit will cost you a lot more money over a long time;
• A Payday Loan may be less expensive than bouncing one or more checks.

The only other fee you can be charged in California is a single $15 fee if your check were to be returned for any reason after it is deposited. All of the fees associated with a Payday Loan are flat fees and do not incur interest charges and can only be charged once per transaction.

The California Department of Corporations licenses companies to do Deferred Deposit Transactions (the legal name for Payday Loans) in California. You can search for licensees at their Web site.