How Payday Loans Work
Sometimes an unexpected expense can come out of the blue when you are least expecting it and are not prepared financially to handle it. Most people will just pull a credit card out of their wallet or purse and pay for the new transmission or medical bill, but what if you don’t have a credit card or your credit card limit is maxed out out. If you don’t have a generous friend or wealthy family member then you are on your own and there are very few avenues open to a person when they are down on their luck. In this situation some people will go for a payday loan or cash advance.
What is a Payday Loan
A payday loan or cash advance has many different names depending on the area you live in. Some call it a cash advance loan.It’s various titles range from check advance loan to post-dated check loan to deferred-deposit check loan.
The Federal Trade Commission in the USA calls it payday loans expensive cash, this is because of the high interest rates and fees charged by payday lenders. Payday lenders lend money to people who cannot get financing from conventional lenders because they are considered too high of a risk of default and because of this default risk factor payday lenders charge high fees and interest rates.
With this in mind you might well ask why would I ever consider getting a payday cash advance loan.
The reality of payday loans is that they are extremely popular with a segment of the population who cannot avail of the conventional financial system available to the greater population because of credit problems and restricted income levels. If you find yourself needing money and the only option is a high interest rate loan then the reality for most people is to take the money and think about paying it back anyway they can. Life is though and we must sometimes make hard choices and if the alternative is far worse than a high interest rate loan then the payday loan just might be the wise choice.
Payday Loan Pros
A payday loan should be your last resort. You should not consider a high interest rate loan if you have other alternatives that are available to you. However if a payday loan is your only option here is a list of the pros of a cash advance loan:
- Regardless of your credit history you will be approved as there is no credit check.
- The application can be made in person at the payday lenders office, on the phone or online.
- The application process takes minutes.
- The payday loan is deposited into your bank account within 24 hours.
- There are no upfront costs.
- It is relatively private process between you and the payday lender.
- Your personal information will not be shared with any other party.
Where can you get a payday loan
There are literally thousands of payday lenders offices in the United States however most people are finding that it is much more convenient and less embarrassing to apply online for a payday cash advance loan.
Payday Loan Tips
The best advice to give a person in need of a cash advance loan is to get the money that they need to stabilize their situation and to then look hard at the issues within their lifestyle which put them into this situation. The last thing you want to do is to fall into a cycle of needing to constantly roll over a payday loan, this will result in a large chunk of your income going to the payday lender in interest and fees.
Try to cut down on your outgoings and find a way of increasing you income. Pay off debts, get rid of credit and try to live on a cash basis. The harsh truth of credit especially credit cards is that if you can’t afford to pay them off monthly then you shouldn’t be using them.
Payday loans and cash advance loans should only be considered when every other option available to you has been checked out. Remember that they should be considered a last alternative to get you through a though period. They are not and where never meant to be a long term option for financial needs.