You’ve probably noticed a lot of companies advertising on TV, Radio, and the Internet for cash advances. This industry has grown quite a bit in recent years and is a new approach to an old idea. These cash advances are used by consumers to get money that is intended to be repaid when the borrower gets their next check. These aren’t quite predatory, and many have found these types of loans helpful in difficult times. It’s important to know what they are and the risk involved in using paycheck advances.
These paycheck advances are short-term cash loans that is usually taken out before the borrower gets their next check at which point the money is repaid to the lender from their back account or automatic electronic withdraw. These lenders also charged a finance fee on top of the cash that was given. In some cases, the borrower must sign over electronic access to their account in the event that an amount is to be received or repaid. All of the charges usually have to be paid in one lump sum. The borrower doesn’t have to pay everything back at once and have the option of rolling the payment over into another pay period.
The terms for these payday loans range greatly in size. The figures vary from state to state and the finance charge for each loan is on average, about 15 to 30 dollars per 100 dollars borrowed. These short-term loans are extremely expensive compared to other types of cash loans. This is in part, due to the ease with which one can receive a payday loan. All a person needs is an open bank account with a relatively good standing and a steady source of income to receive one of these loans. You just need some identification, and there is rarely a full, extensive credit check nor many questions asked of the borrower.
These types of loans have been incredibly helpful to individuals who need a quick influx of cash that will be paid back quickly. Many have the income, but don’t necessarily have the immediate funds for a variety of issues. Payday Loans Uk and in the US have been useful in emergency situations, but they do have some definite downsides. They can be debt traps where consumers can find themselves in repeat borrowing cycles, due to the extreme costs of borrowing. They may be in the middle of paying back one loan and have to take out another. The interest rates are huge, so consumers should use payday loans sparingly and only in emergency situations. They can be highly useful, but only if they’re managed smartly.