How a Payday Advance Works
Ever wonder how a cash advance works? We have all the information to help you decide if a payday advance is right for you. You can apply with us for up to $1000.
What is a Cash Advance?
A cash advance is a short term loan where a lender will get higher rate of interest from borrowers in exchange for a quick approval and small sum of money. A cash advance is paid back through borrower’s next coming income check. Interest rates on such loans are higher and loan periods are shorter than traditional loans.
How Cash Loans Work
Due to high rates of interest, these cash loans are also called high interest loans, with high rates of interest these loans can sometimes get a bad reputation from some groups.
How can I get a Cash Advance?
Cash advances are borrowed through credit merchants present in your local town or with an online lender. Lenders have you complete a short application and usually approve or decline this application on the spot. Many consumers choose to use the internet for their short term lending needs.
Borrowers are required to include information about their level of income.
Interest Rate on a Payday Advance
As earlier discussed interest rates are high on a payday advance which range from around 100% to north of 300%. Some states have implemented regulations that interest rates cannot be higher than 35%. Laws on payday loans are managed by the individual states, while some states have banned payday loans due high interest rates.
For example on a loan of $100, a lender may charge a $30 fee. So the total amount that will need to be repaid is $130. The fee combine with the short term duration of the loan makes for a high APR.
It is required in the Truth and Lending Act for the lenders to disclose their charges. A cash loan can be for 30 days or less, which is helpful for borrowers to cover their short time expenses. A cash advance usually ranges from $100 - $1000.
Who Would Use a Cash Advance?
Most renters use a cash advance to pay their, rent according to a report about 10% of all renters use payday loans for paying their home rent.
Individuals With Lower Income
People who make less than $40,000 per year are more likely to need a payday advance to help cover monthly expenses.
People who do not have adequate savings may need to use a cash loan to cover their short term financial requirements.
To avoid the embarrassment of borrowing from friends and relatives, some people prefer to use payday loans, sometime a friend or relative may apologies that they do not the money or he does not want to give such situation can cause friction, therefore people prefer to take high interest-based loan rather than embarrassment.
Christmas, is a big time of year for cash lenders. Parents want to fulfill the wishes of their children by buying them special gifts and toys. A quick cash loan is one easy way to come up with extra spending cash this time of year.
Many people use cash advance loans to pay their monthly bills, because the cost of electricity is increasing day by day and some people have a bad habit of wasting electricity which causes higher bills, similarly wasting gas and keeping showers on increases utility bill rate.
To avoid the actions of mortgage companies, some people use payday loans so that they can save their homes. Due to late payment or not making your mortgage payments, companies can begin foreclosure proceedings if they payments get too far behind.
Medical emergencies always cost a lot when people are not covered with a medical insurance plan. Small medical emergencies is one reason people inquire about getting a short term cash advance.
Personal story about needing small amount of money
My name is Stuart, I am 18 years old. I have 5 sisters, and I am the only boy in my family. My dad had a heart attack and was the only person who was supporting the family, after his illness his doctor suggested he rest for several months. Now there was no source of income.I decided to work and to support my family, but there was no money at home at that time, then I joined a welding shop from there I start earning about $80 per day.
These were difficult days of my family. I learned how difficult it is to earn money. I worked overtime to fulfill the basic needs of my family.
My income was not enough to support my family; then someone suggested my father get a loan from a cash advance lender for house expenses. So my father contacted a lender and obtained a loan of $500. I decided to use some money to start a small business; I started selling hot dogs on a cart. This work was good for me, I was working at a welding shop, and in the night, I was selling hot dogs. After a few months I started my own welding shop full time, now I own my own successful business, and I have hired two employees that work full time.
Now my family and I are financially secure and my father is now in good health.
Time never remains the same, and good days come. But bad times teach us how to struggle and how to face difficulties and how to stay strong.
Disclaimer: PaydayAdvanceCo.com is not a lender, we do not make lending decisions. Please use short term credit responsibly. Must be 18 to apply.