What Are Payday And Cash Advance Loans?
Payday loans, or cash advance loans, are short-term loans that use a personal check to be held for future deposit in exchange for immediate cash. Borrowers write the check for the amount to be borrowed plus the finance charge. Lenders will hold the check until your next payday, when the loan amount and fee must be paid in a lump sum. If you cannot pay the entire loan amount, you can pay the finance charge only and roll the loan over for another pay period. Another finance charge will be applied to the amount. The borrower can redeem the check for cash or allow the lender to deposit it in order to pay back the loan.
The loan amount ranges from $100 to $1,500, and the term is usually two weeks. To qualify, you need a bank account in good standing, identification, and a steady source of income. The lender does not conduct a full credit check or verify your ability to repay. Online payday loan lenders can often qualify in one minute! The big drawback of payday loans is the fees. Charges range from $15 to $30 to borrow $100 for a two week loan.
Every time you roll a loan over to another pay period, you may pay more fees. Understand that if you are short on cash now, you might still be short on cash when you get paid next, and these loans aren’t a magical solution to that problem. If you aren’t able to pay the fees, you may also get fined for bounced checks from the lender depositing your check. While there are many critics of payday loans and the debt associated with them, proponents of these loans point out that few options exist for people with poor credit if they have an emergency and need cash. If it is your only option left for getting money quickly, at least be aware of the costs so you can plan for repaying the loan quickly.