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Payday Advances: What Every Customer Should Know
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What should be
considered before getting a cash advance?
First, it is important to understand what
they are. Payday cash advances are short
term loans made to borrowers. The loans are
made by check, or electronic transfer from a
loan company to the borrower's account. Many
take advantage of payday loans to cover
necessary bills or emergencies that arise
between paychecks. Generally, the borrower
has to pay a finance charge. Cash advance
loans are paid back in one of two ways. One
way is that the borrower has to agree to
repay the amount in full with their next
paycheck. Sometimes this is done by writing
a post-dated check for the full amount
including the finance charge. The other way
is that the borrower can make monthly
payments with compounding interest.
The ease with which to receive payday loans draws many a potential borrower. A person can walk into any cash advance loan store or
find one online. The lender will require some form of ID and verification of employment. After filling out some paperwork, the borrower leaves with the funds in hand or they are transferred into a bank account.
With the use of the internet, borrowing money has become even more convenient. Literally thousands of online payday loan
websites offer instant approval and no credit check. Applying online requires filling out an application and submitting
personal information including employment information, bank account number, and in most cases the social security number. Cash
advances range from $200 to $2,500. All loan stores have finance charges. Finance charges range from $10 to $100. Depending on the
amount of money requested, the transfer will take place overnight. Generally, if more than $500, the transfer will take longer.
Most will also allow the borrower to extend or "flip" the amount that cannot be paid back right away. The amount paid back is
substantially higher than the original amount borrowed.
Unexpected bills and family emergencies happen, and in this way cash advance stores and websites actually help people. Some say
that getting a cash advance is no different than getting a loan from the bank, or opening a credit card, except that the rates
are different and a credit check is unlikely. Payday lending is not permitted in some states while others have their own laws
regarding how lending should be regulated. Payday loans, like any other type of loan, have their place. The level of responsibility that applies to getting a
mortgage, credit card, line of credit, or buying a car, also applies to getting a cash advance. Each person needs to do research,
read all the fine print and understand all the finance charges. They should not borrow money when they know they cannot pay it back as agreed.
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