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Is a Cash Advance Loan Right for Me?
Payday loans or cash advance loans are personal unsecured loans, which
means you don't have to put down any collateral for the loan. You do however
have to pay significant interest rates and fees. They can be good for
someone who is an immediate cash crunch, if you're willing to pay the
price. For example, you have a car or home payment which is due tomorrow
and you don't have all of the cash you need to make the payment. Rather
than risk a late payment, expensive fees, and a bad mark on your credit
report, you decide it is worth the extra fees to get a payday loan.
Payday lenders are able to charge such high rates because the loans are
unsecured and they take very little information from you. Meaning, for
the lender they are incurring a bit of risk, which you're paying for.
All you really need to get a loan is a job, an address and a checking
account that is in good standing. Another benefit for consumers is that
they money is available almost instantly with cash in hand times ranging
from one hour to 24 hours.
One of the nice features about cash advance loans for consumers is that
they are easily accessible and you can likely find a cash advance store
in your hometown or online ñ whichever is more convenient for you.
The average loan pays out generally no more than $1000-$1500 and the loan
term generally lasts less than 14 days. The fees generally range from
$20-$40 per hundred dollars. That means if you borrow $1000, you owe them
$200-$400 in fees. Pretty steep, though some do charge a flat fee of around
$30 or $40. If you extend or "roll-over" your loan, you will
pay hefty fees for each extension.
If you're in a bind and need cash fast, the process is simple. In store you would write a personal check payable to the lender for the amount you need to borrow plus a fee. So if you're borrowing $300 and the fee is $40 per every $100 borrowed, you'd write a check for $420. The lender will give you the amount of the check minus the fee. They'll give you $300. If you borrow online, the process is similar in that you give them your routing number and account number and they deposit your loan into your account.
Payday or cash advance loans are an alternative for people in a cash crunch, however great care must be taken to make sure borrowing doesn't turn in to a cycle of debt. When the loan comes due, not being able to make a payment will result in extremely costly fees. Be careful and weigh all options before you make a decision to obtain a payday loan.
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