Rich Duprey reports for The Motley Fool that non-traditional financial companies that provide short-term consumer credit are a great investment during the current recession. When banks and credit unions stop offering credit, pawnshops and payday loans are the saviors of choice.
Storefronts that cash checks (which most faxless payday loan stores do) are quite desirable. In fact, they are the preferred one-stop financial-service station for “the unbanked and underbanked,” according to Duprey.
The numbers don’t lie; people like these businesses
Recent earnings statements show that companies like EZCORP (EZPW) and First Cash Financial (FCFS) have benefitted from the current financial climate. The former’s pawn-service profits went up 15 percent in the quarter, while merchandise sales rose 10 percent. Both of these were responsible for an overall 18 percent bump above last year’s profits at this time of year. First Cash Financial had similar results: 27 percent up in merchandise sales, with a 27 percent increase in merchandise sales.
Payday advance loans are also a significant part of the operations of multifaceted consumer credit stores. Despite Obama’s speculated interest in capping the loans, Duprey believes this will not have a tremendous effect upon operations, as the companies will continue to diversify. Companies like Cash America and Advance America are seeking to do just that as states make the unfortunate leap out the window to ban payday loans.
Source : Personalmoneystore.com
