Payday cash advances
Cautionary advice for payday cash advances
Cash advance loans from lenders of payday loans works in a very straight forward manner. Once approval is secured, the amount of the payday cash advances loan is deposited into the applicant's checking account within 24 hours and is ready for withdrawal. Even the repayment process is as simple.
There's no doubt that in today's world, finance has a very strategic role in a person's life. It doesn't matter whether one is financially strong or weak as finance is always a major priority for everybody. There's nobody who doesn.t know what it is like to be faced with an unexpected financial crisis, either long term or short term. Sometimes it may be just a bit of extra cash in hand that's needed to get by till the next pay day. This is the most ideal situation where cash advance loans can prove handy. It gives you easy access to cash during an emergency. However caution is advised as one needs to be aware of all the pros and cons involved in cash advance loans.
Depending on how one handles it, payday cash advances can either be a great convenience or the start to financial ruin. Cash advance loans were conceived for the purpose of providing assistance to those who find themselves in a major financial crisis with the need for immediate cash. In the US the industry dealing with cash advance loans is in throes of a boom in several states.
Also known as short term loans, these loans require you to submit an application. The lender is given either a personal check or draft for the same amount of the loan along with a fee for the service. In most cases cash advance loans come with an upper limit of $500 that has to be repaid to the lender as soon as you receive your next pay check.
Availing payday cash advances can be done in two different ways. In the first option you find an agency in your locality that deals in cash advance payday loans. The other alternative is to make an application online with an institution. The application process involves a form that needs to be filled with your basic personal details which takes no more than mere minutes to complete. The form is then forwarded to a cash advance loan provider in the same state. The lender will then process the application in as little time as 24 hours. However the approval process can also take up to 72 hours.
Following approval, the payday cash advances is deposited into the applicant's checking account the very next day and is ready for withdrawal. On the next payday of the applicant, the amount of the cash advance loan is automatically deducted electronically from the account by the lender. The entire process takes place in a very secure setting and absolute secrecy is maintained throughout.
With cash advance loans, the lenders don't check your account every now and then. The necessary details have to be provided during the application stage itself. Among the details required are checking accounts, a pay stub as employment proof, residence proof, last bank statement, social security number, driver's license number, etc.
On the flipside of cash advance are the exorbitant interest rates involved. The primary reason for this is the convenience of availing the loans whenever you need them. No matter how urgently you need the cash, all you require is the ability to repay $500 with the additional fee of $75 in a matter of weeks, making it the ideal one-time solution no matter how costly.
It may come as a surprise to learn that cash advance loans are frowned upon by a majority of economists and financial experts. This arises from their contention that cash advance loan is a means of exploitation of the underprivileged by companies, in violation of the state's usury laws. Many states in the US have instances of unscrupulous lenders charging sky high interest of up to 500%.
It is tragic that cash advance loans make a remarkably easy way for lenders lure consumers to an elaborate trap. With the interest rates being considerably high, borrowers often encounter difficulties in repaying and therefore land themselves up in a vicious cycle. In their inability to afford repayment, consumers feel compelled to overextend the loan and thereby end up paying the fee many times more. It is common for consumers to eventually pay much more in fees than the actual amount that was a borrowed in the first place. Such circumstances create financial problems for consumers a lot worse than when they availed the loan. With one's financial situation already strained, taking a loan with triple-digit interest rates is a surefire method of going from the fry pan into the fire.
Therefore utmost caution is advised for cash advance loans. Using them the right way is the only way one can benefit from them.
Falling into debt is far too easy with cash advance. Scratch the surface and astronomical interest rates and harsh penalties will be revealed in cash advance loans. An average consumer avails an estimated 11 to 12 cash advance loans a year. Nearly 40% of consumers choose to extend the loan beyond its initial term of two weeks. This is the stage when borrowers begin losing, entirely to the advantage of lenders. The greater the duration that the borrower takes to repay the loan, the more the profit from interest that lender will enjoy.
There is no dearth of unscrupulous cash advance agencies that thrive on exorbitant interest rates being charged on consumers. For many of them, monetary gain by exploiting consumers is the sole aim. According to the Cash Advance Act, lenders are not entitled to charge more than 36% APR on short term loans. A lawsuit was filed by the State Banking Department to stop payday lenders from operating in the US, citing violation of the Act. However thanks to a court injunction, payday lenders are able to continue operations in their state unit till the suit has been resolved. In the meantime lobbyists stepped up their demand on the Legislature for Senate Bill (SB) 30 in order to bring down the fees to $16.25 for every $100.
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