Cash Advance Loans
Fundamentals of a cash advance loan
A cash advance loan is a common form of rapacious lending. According to the National Association of Consumer Advocates, cash advance loans belong to the category of loans, which take advantage of a person going through severe financial hardship. A cash advance loan ensures fast cash against very high interest rates along with unreasonable fees and charges. Although the Payday Loan Consumer Information reports that the interest rates range between 24% and 48%, yet in reality, the interest rates sometimes go up to 400%.
What is a cash advance loan?
Cash advance loans are often known and lent as payday loans. A cash advance loan is a small, short-term and collateral-based loan that uses a borrower’s checking account as collateral. Such loans don’t require the borrowers to meet strict eligibility criteria or do huge paperwork. A personal identification proof, a regular full time job and an active checking account are enough to obtain a cash advance loan. The amount of loan may vary by individual state laws, but usually it ranges between $100 and $1000.
What is the procedure?
Cash advance loans are normally offered for 2 weeks or for the period between when a borrower gets the money and his next payday. At the time of receiving the loan, the borrower needs to provide a post dated check for the loan amount along with the interests and other fees. Otherwise, he should sign a document to authorize the lender to extract funds from his checking account electronically on the due date. If the borrower fails to pay back the whole loan amount plus interests and service fees on the due date, the lender is likely to extend the due date to his next payday. There are some rules that the lender must follow regarding extension of a cash advance loan. However, these rules differ from state to state. For instance, in Washington the lenders should offer the borrower an option of installment payment without any additional charges, while in Michigan the lenders may demand an additional charge for the service.
What are the service fees?
If a borrower takes out a cash advance loan of $100 for 14 days, paying a service charge of $15 may not sound illogical. Nevertheless, if the service fee is converted into a daily fee and then the APR is calculated, it will be a shocking figure indeed. If you divide the service fee by the number of days, you will get the daily service fee. In this case, it will be $1.07. Now multiply the daily service fee by 365 days to get the APR that in this instance is 391%.
What should be considered?
Cash advance loans are illegal in 13 states; while in 37 states such loans are legal, but monitored by the state government. The laws related to a cash advance loan vary from state to state. In some states, there is an upper cap on the APR; while in other states, there is no cap on the APR. Therefore, before you take out a cash advance loan, make sure you check your state’s laws and limitations.
Which lender should you choose?
Nowadays many people take out cash advance loans to meet their emergency financial needs. There are a number of cash advance lenders in the market that offer such loans. However, most of them are predatory. Therefore, while looking for a cash advance loan, you must be very careful about choosing the right lender. Here are the tips to find the right cash advance lender.
Does not require a credit check – You should select a lender that ensures no credit-check. Cash advance loans are purposely designed for people with bad credit. People with good credit normally don’t opt for high interest cash advance loans, because they qualify for conventional low interest loans. Therefore, if a cash loan provider requires a credit check, you must avoid it.
Meets your requirements – Choose a lender that can meet your requirements. You may need more than 1 or 2 hundreds dollars before your next payday. Make sure your chosen lender is able to lend an amount more in tune with your requirements. However, you shouldn’t take out any amount that you can’t afford to pay back in time.
Doesn’t need huge paperwork – Some lenders require the borrowers to do huge paperwork including a number of forms to fill out. Avoid such cash advance lenders. Your employment proof, recent pay stubs and a promissory note are enough to get a cash advance loan. Choose a lender that doesn’t waste time on doing paperwork.
Offers quick cash – Since your situation demands fast supply of money, make sure you deal with a lender that offers quick cash. Ideally you should choose a lender that doesn’t take more than 24 hours for loan approval and funding.
Offers favorable terms – Look for a cash advance lender that offers flexible repayment options and favorable loan terms. For example, if your payday is only 2 or 3 days away, make sure your chosen lender allows you to repay the loan from next 2 paychecks.
With cash advance loans, you can fulfill your immediate financial obligations effectively. However, these loans often charge higher interest rates than traditional loans offered by the banks or credit unions. Therefore, make sure you pay off the loan on the due date to avoid paying hundreds of dollars in interests.
We offer the fastest cash advance loans without any credit check. We approve the loans even before you fax the documents.