Sometimes you may find that you’re having problems making ends meet, or an emergency expense comes up that you simply cannot cover with what is in your bank account. In cases such as this, a cash advance is a very quick and easy way to obtain some fast cash. There are many advantages as well as disadvantages to cash advances, sometimes referred to as payday loans.
First and foremost, you can get money in hand fairly quickly, which can be invaluable when you’re short on cash. For example, if your car breaks down and you need it to be repaired in order to get to work, but you simply don’t have the money to cover the repairs; payday loans are there to help get you back on your feet.
The payday loan application process is fairly simple, and most states have several payday loan offices located in most populated areas. The offices usually ask for very few items, generally just a positive ID, proof of employment (usually via pay stub), and an active checking account. The concept of payday loans is to offer people a cash advance loan on short notice with little resources.
In most cases, you do not need to have good credit since a credit check is not usually performed. This can be a great resource for those with little resources and not so good credit. Of course, there are some downfalls to these payday loans as well, and the buyer (or in this case, borrower) should beware.
While payday loans help people get out of a bind, the interest rate on the loans can be extremely high, sometimes almost 700% or more! The longer it takes you to repay the loan, the more interest is accrued, and you often end up owing several times the amount you originally asked for. While most payday loans are only around $100-$500 in most cases, this can still be dangerous for people with very little money to begin with. Imagine taking out a payday loan for $100 and by the time you get paid, you owe the lender $700 or more!
Because of this fact, recent legislation has been working to control the payday loans business, and a law was passed that has capped the rate for military personnel at 36%. Many consider this type of lending predatory, meaning that the companies who offer payday loans prey on those with limited funds. Regardless of this fact, the payday lending industry is a booming business with millions of customers each year.
Some states are currently asking that payday lender businesses no longer operate within their borders. The situation has gotten to be a subject of hot debate in legislation, particularly since so many members of the US military have begun to use them as a resource for fast cash.
If you need money quickly, payday loans can be a solution, but be sure to weigh the pros and cons, and make sure you repay the loan as soon as possible to avoid any unnecessary interest or fees that you might incur.