Payday Loan and Cash Advance Warning
Unfortunately, payday loans are far too easy to procure. Sometimes I wish that it took a little bit more time before you can get approved for a cash advance or paycheck advance as some people call it.
A payday loan will likely be approved quickly if you can prove that you have reliable employment in some kind of decent and recent work history. Essentially you just give the payday lender a certified postdated bank draft or a postdated personal check to cover your repayment at the end of the short to to three-week term. That’s it folks – a little bit scary maybe?
A paycheck advance can sometimes be healthy if it is a one off deal to get you through a financial emergency such as making the rent or mortgage payment before you get evicted. I would suggest that if your finances are in that bad of shape you need to be worrying a lot more about your overall financial situation then this simple short-term cash advance.
If however, you have no other choice but to borrow money from a high interest short-term payday loan provider then I guess you just have to do it, but keep in mind there are millions of Americans every month making the bad choice of asking for a payday loan when the money is not for need only reasons. People actually apply for a paycheck or cash advance just the go on a trip or two they party on the weekend. This is paramount to personal finance treason in your humble narrator’s opinion.
If you are careless enough to keep using payday loans and put yourself firmly behind the financial 8 ball, you are sliding down a slippery slope my friend. As we mention many times on this web site your interest rates on your payday loan can reach heights of 350% per annual interest. This is a real problem for many people and not just the people you think. Even Michael Jackson the multimillionaire got caught up in this payday loan cycle of abuse. Don’t be silly, keep your nose, keep your face, and keep yourself on top of things and take a good close look at the payday lenders agreement including all of the small print at the bottom of the page.
The way these payday loan operators work is that they charge you their hefty interest rates on the money you borrow right out of the gate. The the postdated check or money order you give the payday loan company will include the finance charges for the short term loan right up front. You are not going to squirm out of this one.
It it does not stop there though because you can easily slide into the “payday loan cycle of abuse” (I like to call it). When your short term cash advance is due and your bank account balance is inadequate to clear the postdated check that is in the hands of the payday loan provider, they “provide you with” other options that you must be aware of. This is when it can get a little bit scary because now the payday loan lender begins to compound the interest on your loan. There has been reported cases of predatory payday lenders charging over 500% in finance charges of the original principal they lent.
In this situation the payday loan operator will charge you late payment fees and extra interest charges that will quickly it up to an exorbitant cost to yourself. The point I’m trying to make here is that if you have no choice but to use a cash advance lender Make Sure you have the funds available in your checking account to clear their initial postdated check and be done with it.