Court

Going to Court

If a customer ever defaulted on a payday loan we would try to call them. That rarely worked because they either avoided us or their phone had been disconnected. Sometimes they made an agreement with us and would pay their debt in several installments, those who didn't we would take to court. Taking people to court is timely and costly, but it was easy to pass the costs onto the customer. A $200 loan, for example, would often end up being $450 or so by the time we were done with them.

Although I was relatively new, one day my boss sent me to go to the courthouse to do the legal stuff. Payday loan companies take thousands of people to court every year. Part of the reason they charge such high interest is that the loans they give are very risky--many people default. I went to the courthouse in the morning and waited for the judge to come in. That morning there were three or so payday loan places, including myself, in the courtroom. While we were only taking a couple people to court, Check City, our biggest competitor, was taking about 50 people. Very few people actually show up when we take them to court, but they are supposed to and if they don't then I believe it goes on their record and we also dump it on their credit (by the way, you don't build credit by paying off payday loans on time--at least you didn't at our store).

For anyone reading this that is actually thinking about starting a payday loan business, know that if you aren't effective at taking people to court you will not survive in the industry.

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