Should you get a cash advance payday loan?

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Payday Loans Equal Very Costly Cash: Consumers Urged to Consider the Alternatives "I just need enough cash to tide me over until payday." "GET CASH UNTIL PAYDAY! . . . $100 OR MORE . . . FAST." The ads are on the radio, television, the Internet, even in the mail. They refer to payday loans, cash advance loans, check advance loans, post-dated check loans, or deferred deposit loans. The Federal Trade Commission, the nation's consumer protection agency, says that regardless of their name, these small, short-term, high-rate loans by check cashers, finance companies and others all come at a very high price. Here's how they work: A borrower writes a personal check payable to the lender for the amount the person wants to borrow, plus the fee they must pay for borrowing. The company gives the borrower the amount of the check less the fee, and agrees to hold the check until the loan is due, usually the borrower's next payday. Or, with the borrower's permission, the company deposits the amount borrowed - less the fee - into the borrower's checking account electronically. The loan amount is due to be debited the next payday. The fees on these loans can be a percentage of the face value of the check - or they can be based on increments of money borrowed: say, a fee for every $50 or $100 borrowed. The borrower is charged new fees each time the same loan is extended or "rolled over." The federal Truth in Lending Act treats payday loans like other types of credit: the lenders must disclose the cost of the loan. Payday lenders must give you the finance charge (a dollar amount) and the annual percentage rate (APR - the cost of credit on a yearly basis) in writing before you sign for the loan. The APR is based on several things, including the amount you borrow, the interest rate and credit costs you're being charged, and the length of your loan. A payday loan - that is, a cash advance secured by a personal check or paid by electronic transfer is very expensive credit. How expensive? Say you need to borrow $100 for two weeks. You write a personal check for $115, with $15 the fee to borrow the money. The check casher or payday lender agrees to hold your check until your next payday. When that day comes around, either the lender deposits the check and you redeem it by paying the $115 in cash, or you roll-over the loan and are charged $15 more to extend the financing for 14 more days. If you agree to electronic payments instead of a check, here's what would happen on your next payday: the company would debit the full amount of the loan from your checking account electronically, or extend the loan for an additional $15. The cost of the initial $100 loan is a $15 finance charge and an annual percentage rate of 391 percent. If you roll-over the loan three times, the finance charge would climb to $60 to borrow the $100. Alternatives to Payday Loans Before you decide to take out a payday loan, consider some alternatives.
  1. Consider a small loan from your credit union or a small loan company. Some banks may offer short-term loans for small amounts at competitive rates. A local community-based organization may make small business loans to people. A cash advance on a credit card also may be possible, but it may have a higher interest rate than other sources of funds: find out the terms before you decide. In any case, shop first and compare all available offers.
  2. Shop for the credit offer with the lowest cost. Compare the APR and the finance charge, which includes loan fees, interest and other credit costs. You are looking for the lowest APR. Military personnel have special protections against super-high fees or rates, and all consumers in some states and the District of Columbia have some protections dealing with limits on rates. Even with these protections, payday loans can be expensive, particularly if you roll-over the loan and are responsible for paying additional fees. Other credit offers may come with lower rates and costs.
  3. Contact your creditors or loan servicer as quickly as possible if you are having trouble with your payments, and ask for more time. Many may be willing to work with consumers who they believe are acting in good faith. They may offer an extension on your bills; make sure to find out what the charges would be for that service - a late charge, an additional finance charge, or a higher interest rate.
  4. Contact your local consumer credit counseling service if you need help working out a debt repayment plan with creditors or developing a budget. Non-profit groups in every state offer credit guidance to consumers for no or low cost. You may want to check with your employer, credit union, or housing authority for no- or low-cost credit counseling programs, too.
  5. Make a realistic budget, including your monthly and daily expenditures, and plan, plan, plan. Try to avoid unnecessary purchases: the costs of small, every-day items like a cup of coffee add up. At the same time, try to build some savings: small deposits do help. A savings plan - however modest - can help you avoid borrowing for emergencies. Saving the fee on a $300 payday loan for six months, for example, can help you create a buffer against financial emergencies.
  6. Find out if you have - or if your bank will offer you - overdraft protection on your checking account. If you are using most or all the funds in your account regularly and you make a mistake in your account records, overdraft protection can help protect you from further credit problems. Find out the terms of the overdraft protection available to you - both what it costs and what it covers. Some banks offer "bounce protection," which may cover individual overdrafts from checks or electronic withdrawals, generally for a fee. It can be costly, and may not guarantee that the bank automatically will pay the overdraft.
The bottom line on payday loans: Try to find an alternative. If you must use one, try to limit the amount. Borrow only as much as you can afford to pay with your next paycheck - and still have enough to make it to next payday. (Source - FTC http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt060.shtm)
From other contributors:
  • A payday loan is an expensive way to borrow money. Paying $50 to borrow $200 for two weeks is something like a 600% APR. Even a credit card with a 20% interest rate (which is very high right now, given today's low rates), would be much better for you. During an emergency we borrowed a payday loan and the experience was worth mentioning.
  • Cash advance payday loans are designed for people who do not have any other resources to solve their cash crisis. Therefore, the fact that a credit card cash advance has lower rates is not applicable to someone who is either maxed out or does not have a credit card. The cash advance industry came about due to strict small loan policies put into lace by traditional banks. If they refuse to service these consumers without perfect credit and collateral, than who will? And when the lights go out because the electric bill isn't paid or the rent overdue, than what is a person to do? Paying a bill late or bouncing a check can end up being much more costly than the fees associated with a cash advance payday loan. LATE charges on most bills are MUCH less than payday loan rates.Most banks now offer the "overdraft" protection at slightly less than payday rates . LOL
  • Absolutely not ... this is a quick way to take yourself further into debt. You must understand that in order to get the cash advance, you have written that agency a check for the amount "advanced" plus a fee, usually $50. That check you wrote will be submitted to YOUR bank for payment after about 2 weeks. If the funds are not there, then YOUR debt multiplies by leaps and bounds, furthering your need to "borrow" even more money to pay off a prior advance "loan". That simple $200 cash advance has then quickly turned into Thousands of dollars being owed.
  • Bottom line: If you don't have the funds in the bank in the first place, you really have no business borrowing against what you haven't yet earned.
239 people found this useful

Are Payday advance and loans that online are they scams?

Some are. Many states do not allow payday lending. In these states, it would be illegal for a payday lender to offer you a payday loan. They would not be licensed to conduct business. You would have to check out your state laws on payday loans. There are some better payday lenders online, meaning on (MORE)

Can you file bankruptcy on payday loans or cash advances?

For each bankruptcy case, there is a judge who resolves to be presiding over the case. The judge will be one who settles on if the company case will be discharged or dismissed. Bankruptcy is not carry out like any usual law cases. If the company which are filing, they do not need to be in attendance (MORE)

Should you get a payday loan?

A payday loan or quick loan should be your last resort because of their high interest rates. You will pay a lot of interest and lose a lot of money if you use them frequently and especially never default on a quick loan because of the fees.

How would you be able to get a cash advance payday loan?

For most advance payday loan companies you have to meet the requirements of having a job or steady source of income, an active bank account, and make a certain amount of money each month (usually a minimum of $1000 or something in that range). If you meet the requirements, you will be approved and r (MORE)

What are some disadvantages to a payday advance loan?

The disadvantages of a payday advance loan are the high interest rates, depending on the jurisdiction, and the questionable practices of the bank or lenders dispensing them. In fact people left with the only option of getting a payday advance are often subject to hefty fees, damaging any prior credi (MORE)

How can you get a payday advance loan?

A variety of providers will offer advance cash payday loans, however, these services should be used with caution. It is important to note the interest rates, which are often very very high, and work out whether this is a viable otion in the long term

What exactly are payday advance loans?

If you are low on funds, then you may want to consider getting a payday advance loan. It is intended to loan you money, based on your income, at a high interest rate.

What are the interest rates for payday cash advance?

The annual percentage rate for cash advance loans varies greatly with the amount of money loaned, the company used, the length of the loan, and the state one currently resides in. The APR is usually in the 1,000% to 250% range.

What is the purpose of a payday cash loan?

If there is a few bills that need to be paid that were unexpected or more expensive than budgeted for, a pay day cash loan can be used. This means money will be loaned and then paid back on the next pay day of the customer.

How does a payday cash loan work?

Payday loaners provide a short-term unsecured loan to be repaid at the borrower's next pay day. There are fees attached to the loan. Proof of employment is needed to get this type of loan.

What makes a Magnum Cash Advance better than a Payday Loan?

A Magnum Cash Advance has many advantages over a Payday Loan. First, a Magnum Cash advance allows you to borrow up to 30% of your monthly pay. You can spread this loan over several different payments thus it provides more flexibility than your traditional Payday Loan. There are also no rollover fees (MORE)

Is cash til payday a loan of sorts?

Yes, I would consider it a loan. You are given cash until that date agreed upon. You also pay interest on it. Isn't that the terms on a loan? Your credentials are verified and you are given a loan with payback terms which includes a repayment date or due date.

What are some good advance payday loans?

"Check into Cash is a very reputable payday loan company. I have used them myself and their interest rates are reasonable, they are very nice, and they even give you a reminder call to pay the money back."

Why should you be cautious of payday loans?

Payday loans charge very high interest rates, and often have otherstipulations attached. ------------------------------------------------------------------------------------------------------------------------------------------------ Yes the interest rates on Payday Loans are astronomical and if yof (MORE)

Where can one find payday cash loans?

Payday loans can be found both online and at physical store locations. Some examples of payday loan websites are goswampdogs, aaapaydaycash, and paydaycashloan. Examples of physical store locations include Speedy Cash and Check into cash.

Where can one find a payday cash loan?

Payday cash loans are available online as well as at local outlets that offer check cashing services. Payday cash loans usually require pay stubs or direct deposit information and the amount that can be given in the form of a loan depends on the amount that a person is paid per pay period. Online (MORE)

Where can one find cash payday loans?

One can find cash payday loans at many locations online. By looking in a telephone book for your area, you can also find locations near you that can give you cash in advance.

What is instant payday advance loan?

An instant payday advance loan is a short-term loan that is usually paid back to the lender on the borrower's next payday. These types of loans can apparently be very risky for the lenders, because some lenders do not run credit checks or verify the borrower's income.

Where can one find payday cash advance loans in Ottawa?

A number of companies specialize in providing payday loans in Canada, including Ottawa. Not every company promising a cash advance loan is legitimate, but some to research include Mr Payday, Eazy Cash, and Money Mega Mart.

What are advance payday loans used for?

Payday loans, sometimes called cash advances, are short-term loans with no security options. They are generally small sums. The name comes from their typical use - a small stopgap to help people make ends meet until their next paycheck.

Where can one get a fast cash payday loan?

Where and whether one can obtain a fast cash payday loan depends on one's location. Some countries place severe limitations and restrictions on payday advances, in others they are more readily available. Within the US, different states also have different rules and licensing requirements concerning (MORE)

What are the risks associated with a payday cash loan?

Payday cash loans come with a substantial risk to the lender, due to uncollateralized loans to high-risk borrowers. There is little risk to the borrower outside of damage to credit and accumulated interest if the individual does not pay back.

Where can one get a cash loan until payday?

There are many places one can get a loan until receiving a payday. The best place to get a cash loan is by simply visiting a local bank. Another great place to get a cash loan is Money Mart.

Where can one get a payday loan cash advance?

Money Mutual's online lending network is a cash advance source that can be trusted to find a payday loan quick and easily. Your personal and private information is kept confidential.

Which companies offer payday loan cash advance loans?

Pay Day loan cash advance loans can be found at Wonga, Quick Quick and Purple Pay Day. It should be noted that the extremely high interest rates on these loans is payable from the first day of taking the loan and that defaulting can result in heavy fines.

Where can you find a cash advance payday loan online?

You can find cash advance payday loans online from the Advance America website. Once on the website, you can apply online for the loan by entering your zip code into the location field on the right side of the screen.

What are the benefits of cash fax loan no payday?

The benefits of a cash fax loan no payday include the speed in which you receive the money, in as little as an hour, and also the fact that you don't have to wait for payday if you are short on cash at the moment. As soon as a person in need is matched up with a lender you can receive the money.

What is the purpose of a cash advance until payday?

The purpose of a cash advance until pay day is to allow one to buy items one needs if one has run out of money before one receives a pay check. The cash advance is taken from one's projected paycheck amount and has to be paid back, usually with a very high interest rate attached to the original amo (MORE)