What is a Short Term Cash Advance or Payday Loan?
A cash advance loan is usually a short-term loan that is designed to lend assistance to those in need of money when your expected wages salaries are too far away. All of us have felt tied financially for periods and all have longed for a payday advance of some kind. The choices we have are accumulating more credit card obligations, borrowing from mates or relatives, or trying to obtain credit from your employer.
What is a Payday Loan?
Payday loans are a generally small money wage ranging from between $100 to $1000 and payable over a short term typically within one week to one month. A Pay day loan store is a great tool in your financial armoury, given that they solve emergency problems, which reveal themselves amongst your pay checks. Many stores advertise as an easy and fast way to check into cash when you really need it and you can frequently extend or roll over your payday loan another time or two by paying an additional fee and leaving the principal amount to pay off later.
Pay Day Loan Calculations
Payday loan fees are usually calculated in two different ways either as an exact amount of dollars per $1 provided or as a percentage of the sum you borrow. Pay day loans do have higher annual percentage rates than most loans however, because these loans are meant to be taken out for very short periods of time, and they are typically taken out in small amounts, the fees are really not that unreasonable. For bad credit personal loans also one need not submit any collateral and therefore these types of personal loans are quick, no hassle and a good way for consumers to secure small, emergency loans, with little or no red tape.
Payday Credit loan Procedures
A cash advance loan is usually a short-term loan that was designed to lend assistance to those in need of money when payday is too far away. However, you can use your cash advance loan for anything you want, you are not asked the reason for it. You will then be asked to write a post-dated personal check in the amount of the cash advance loan plus the interest charges that will accrue. Your cash advance will then be deposited by the pay day loan store into your bank account normally within a 24 hour period. When the pay back date comes around, the personal check that you wrote is then cashed and your repayment is made.
Does Adverse Credit History Affect Eligibility for Payday Loans?
In the vast majority of cases, your current and previous credit history will be assessed along with other lending factors to determine your eligibility of this type of lending. However, one of the most attractive aspects of a Payday loan is that typically, lenders tend to air on the side of caution when it comes to previous credit histories which for the most part ensures that those whom are requiring a loan should be in a position to achieve this goal in the vast majority of cases. To understand more about how your credit score can affect your ability to obtain a cash advance loan see this website – FTC Consumer Information which also has some useful links to other sites for more detail information.
Interest Rates on Payday Loans
There is one disadvantage of cash advance loans which is the unusually high interest rates. The interest rate associated with a bank loan or credit card is typically between 4% and 11% annually and for individuals with low credit scores or a turbulent credit history, the interest rate for a credit card may be as high as 30%. The interest rate charged for a two week loan from a payday loan store averages between 300% and 700%. A proportion of areas within the US are currently trying to kick start legislation that will place a cap the amount of interest that a pay day lender is permitted to charge customers at a 38% interest rate, more than ten times less than many of the pay day loan lenders are currently charging now.
As with any personal lending care must be exercised when considering which loan to take, your current circumstances, the availability of credit, previous credit history and many other factors will determine what credit you are entitled to and from whom. It is correct that a pay day loan store will charge their customers a higher interest payment but this should also be balanced with the increased risk and short term nature of the cash advance. For a large majority of people payday loans offer an excellent alternative to mainstream lending do however make sure that you are in a position to repay the balance at the agreed repayment date given ‘rolling over’ the debt can result in a significantly higher initial debt.
Obtaining a credit lifeline from a pay day loan store is a great alternative to having to bounce a check, pawning your favourite and very personal property, or borrowing money from your family or friends leading to their thinking that you have become irresponsible. A large number of individuals, from various walks of life, select a payday loan seeing that they provide fast and effective methods to secure a quick and effective cash loan from a payday loan store, particular when considering a typical loan or credit card application, which can take several days or even weeks to be processed.