How do Cash Advance Payday Loans Work?

Understanding Cash Advance Payday Loans

Several lenders can offer you a loan without the need for you to go through a credit check. A cash advance loan is one of these loans. Before taking this kind of loan, you have to understand how it really works.

Cash advance loan is a type of short term loan that can give you quick access to cash. It is best for people who are not financially ready when emergency situations occur and for those who cannot take out a loan from traditional lenders because of poor credit.

Despite of its accessibility and ease in application, this type of loan come with high interest charges. Aside from the interest, it also charges high fees. On the average, cash advance loans charge $15 in fees for every $100 borrowed. As such, you have to find other

English: Cash Money Payday Advance Outlet on Y...

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means to obtain money if you think that you will not be able to afford repaying the loan.
Cash advance payday lenders are numerous. You can find it almost anywhere. If you want your application to be convenient, then you can go online and look for a lender there. As a recommendation, opt for an online network.

An online network of payday loans connects with 50 lenders competing in the business. When you apply through them, you can get the best rates because the lenders will try to make sure that you choose them by offering you the best deal. You only need to send your application online and then you will easily get the approval that you need.

To qualify for a cash advance loan, you must be at least 18 years of age. You must also be working during the time of your application. Oftentimes, the lender will only approve you if you earn at least $800 a month. Moreover, you need to have a bank account where the money can be deposited.

Once you get approved of your application, you can get a loan amounting from $300 to $1500 no matter what your credit rating is. The best part is, you can obtain this as quickly as 24 hours after submission of your application.

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Other Options to Taking and Using a Payday Loan if you have Bad Credit

Financial Options Aside from Taking a Payday Loan

When you are just beginning with your life as an adult, you have to make the right decisions financially. A lot of people embark in the real world without having the right financial knowledge. Because of this, they end up making the wrong decisions that have a long term effect on their life. Some of these include being trapped in debt caused by taking out certain loans that becomes too difficult to pay. To avoid suffering in the long run because of your poor financial choices, you have to know your financial options that will not put your financial status in danger. Here are some of them.

A shop window advertising payday loans.

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1.) Credit Union Loans- this is a small, short term loan offered by your local credit union if you are a member.

2.) Small Bank Loans- this is a small loan offered by traditional bank lenders.

3.) Cash advance from employers- some employers provide this loan. You can ask them to give you your paycheck in advance instead of seeking for a payday loan that will charge you with high fees and interest.

4.) Borrow from friends and family- Do not allow your pride to stop you from borrowing money from close family and friends. But, when you do obtain assistance from them, know your limits and set your expectations straight so that you will not end up destroying your relationships.

5.) Start an emergency fund- You must start building up your savings to reach an amount that can pay up for your six months worth of expenses. This is what you call your emergency fund. If you do not have this now, start it. This will help you avoid taking out any type of loan in the future.

6.) Use your credit card for emergency only- If you have a credit card to turn to, you do not need to obtain a loan just to pay for emergency expenses. Use your card for emergencies or only if you know that you can repay the balance of your card as soon as possible. Doing this will not only help you prevent payday loans, it will also allow you to maintain a good credit rating that is truly beneficial for your financial future.

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Payday Loan Scams Help Online

Scammers advertising loans with advance fees seek out people who are in great need of money. They promote their products and services in local print materials and legit looking websites online. They entice people to grab their offer by using words like “guaranteed” and phrases such as “easy credit.”

Oftentimes, websites offering advance fee loans asks their applicants to fill out an application form that requires personal information such as social security and bank account numbers. Then, the applicants are victimized when they are informed that their loan is approved but need to pay an advance fee amounting to several thousands of dollars before they get it. After they make the payment, they never get the loan they were promised or they are even asked to pay more.

In order to avoid these scammers, the Better Business Bureau warns individuals seeking for loans to be wary of the following lenders:

1. Lenders who request upfront fees. Fees may be required by a lender but not prior to completing the loan application. Be cautious once you are asked to send money through wire transfer or money order.

2. Lenders who do not give their contact information. You must always ask for a physical address of their office and their phone numbers. If they cannot provide you with any of these, it may be a sign that they are trying to avoid law enforcement.

3. Lenders who commit to provide a loan despite of the applicant’s credit history. Lenders operating legally will usually not guarantee approval before application most especially if the applicant has poor credit rating.

4. Lenders that do not operate within the U.S. Most of these lenders use fake U.S addresses or P.O boxes.

5. Lenders who pressure their applicants to take immediate action. Scamming lenders will ask you to rush in making a payment to them and sending your information before serving any paperwork. Make sure to check the company’s background before providing any information. As much as possible obtain a written contract of your loan.

6. Lenders who use names that sounds like other legit companies. They do this to confuse you and tempt you to obtain their products and services.

It is tempting to obtain advance fee loans especially when you are in need of money. However, be cautious and think about it deeply. You can check with the attorney general’s office to find out if the lenders are registered. You may also check if they are legal through the BBB.

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Another Attempt to Put a Cap on Payday Loan Interest Rates

Lawmakers are passing a bill as a second attempt to control the industry of payday lending. During the previous year, lobbyists and politics had a big role in creating legislations for the purpose of regulating an industry that is said to take advantage of vulnerable residents.

The sponsored act of Rep. Gordon Hintz, D Oshkosh entitled Predatory Lending Consumer Protection Act blocks auto title loans and sets limits to the loan amount. Specifically, the maximum amount must be at 35% of the gross monthly income. However, this act did not put the same cap of 36% to interest rates.
Spending huge amounts, lobbying lawmakers and contributing to campaigns were all done by the payday lending industry to fight the bill.

At present, two Republicans namely Rep. Evan Wynn, R-Whitewater, and Sen. Glenn Grothman, R-West Bend, are submitting a proposal to the legislature for a 36% limit to payday loan interest rates.
This new bill is also co-sponsored by Hintz. It was Wynn who sought information from Hintz and banking industries to work on the proposal. Wynn praised the work of Hintz and his colleagues in the previous session and blamed lobbyists for the failure of the interest rate cap proposal.

A Payday loan is a small amount, high interest loan with a short payment period. Typically, a payday loan is paid on the next paycheck of the borrower. The usual charge amounts to $20 for every $100 of loan. However, when the borrower fails to pay during the specified period, the debt is rolled over and the interest charges pile up.

The payday lending industry began in Wisconsin in 1995. Back then, interest rates were at 18 percent maximum. Eventually, 17 payday lenders emerged in the state. At present, there are about 550 of them.
According to Hintz, it is expected that the payday loan industry is preparing to prevent the bill on interest rate cap from becoming a law.

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Unsecured Personal Loans Vs Payday Loans

In the past few years, many Americans have been struggling with their personal finances. This led them to get trapped in bad credit. Because of this, it is no surprise that most of these people are trying to find ways to meet their needs.

They have two options to do this. One is by obtaining a bad credit unsecured personal loan. Another is getting a credit check payday loan. Before choosing from these two, it is important to thoroughly understand their difference.

It is highly advised that careful research is done before choosing a lender that gives loan to people with bad credit. Together with this, the borrower must also understand the process in lending. Researching carefully and understanding the lending process can help cut loan costs, fees and interest rates.

Unsecured personal loan obtained by borrowers with bad credit requires a credit check from the lenders. This is the lender’s way to determine the amount of interest to be charged from the amount of loan. Usually, an interest rate of at least 20% is charged to loans of borrowers with poor credit standing.

There are instances when lenders do not require a credit check. This type of loan is known as payday loan. Lenders compensate for the lack of credit check by charging additional upfront fees. The average range of these fees is $15 to $35 for every $100 borrowed. Take note that this amount is charged over and over again each time a borrower receives a paycheck but do not give a full payment for the loan amount.

Before taking any of these two loans, always be prepared with a plan on where to get the payment. Without it, the financial condition can become much worse. It can lead to more and more debt that can become very difficult to settle.

more information on personal loans and paydayloans:

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