Understand the Nitty Gritty of Payday Loans

February 1st, 2011 |

Qualifying for a payday advance is easier than qualifying for traditional credit. Your job and your paycheck act as your collateral. You need to meet the following minimum requirements: currently have a job (or receive regular income), make at least $1000 per month, are 18 years of age or older and a U.S. citizen, have checking account or savings account with direct deposit, and not be active in the military.

Customers typically receive approval within hours of applying. Since the money is wired directly into your checking or savings account, you can usually have access to your funds the very next day after talking to a customer service provider designated by your service provider.

You might be worried about your information being secure if you get a payday loan online. All sensitive information transmitted between your browser and a legitimately protected website should use 128 bit Secure Socket Layer (SSL)encryption technology.

You can use the payday loan service whenever an immediate or urgent need arises. It is important to remember that a payday cash advance loan is a short-term answer to an immediate cash need. Payday loans are not intended for repeated use in supporting an on-going budget situation from payday to payday.

Repeated use or reliance on payday loans can create serious financial difficulties. If you need help with credit, budgeting or debt management, please contact the National Foundation for Credit Counseling at 1-800-388-2227.

Lenders qualify you for a payday advance amount based on your current income and other questions that you answer truthfully on our sign up form. Payday cash advance loans are generally repaid back when you receive your next paycheck.

The standard time for loan repayment is usually no less than seven days and no longer than eighteen days. Your lender should disclose this information when you agree to their terms. The costs associated with fast cash advance loans are intimately bound up with lender terms, the amount of money borrowed, and the processing fees necessary to complete the transaction.

Cash advance loans are as a rule more expensive than a traditional loan. For a $200 loan, expect to pay a minimum service charge of $20-$30 due within one or two weeks of the loan. When you take out a loan, you’ll have to provide a check or money order in the amount of the cash advanced plus the service fee — cashable at the end of the term of the loan.

You can opt to rollover loans in certain circumstances — thus voiding the check or money order you used to acquire the money in the first place — but doing so subjects you to higher interest rates and penalties.

Within a few short months, the penalties associated with your loan can exceed the balance of the loan itself many times over. For instance, in our example, let’s say that the lender charges a service fee of $30 per week late.

By the end of just ten weeks, you’ll have accrued $300 in service charges plus the $30 for the initial price of the loan. Thus, to pay back your $200 loan at the end of ten weeks rollover will cost you (including the balance) $530.

Cash advance loans need not cost you an arm and a leg, however. If you prioritize repayment and limit your use of said subsidies to true emergencies, cash advance loans can actually deliver critical stopgaps during tough fiscal times.

If you find yourself increasingly dependent on cash advance loans for day-to-day survival, however, it’s a good bet to get in touch with a credit counselor near you. After all, delinquent loans of any kind can impact your credit rating, which can in turn impact your future buying power.

In other words, if you get into credit trouble as a result of past due cash advance loans, you may find it much more difficult to attract lenders for more equitable longer term loans in the future. If your debts are piling up, and your only source of legitimate financing is cash advance loans, consider filing for bankruptcy to wipe your slate clean of unsecured consumer and personal debts.

About the Author

Jack R. Landry has a PHD in financial services and has written hundreds of articles relating to consumer services and online cash advances. He has been a consumer advocate for nearly 25 years.

Contact Info:
Jack R. Landry
JackRLandry@gmail.com
http://www.checkcity.com