Looking for easy money ? Early payday?
“ I just need enough cash to tide me over until payday.”
Does this sounds familiar to many of you out there looking for cash pay advance ?
Cash pay advance has been around for a long time. It falls into the category of personal, unsecured loan.
Cash pay advance are provided as a temporary solution to an otherwise emergency cash deficit. It is available to people who face with cashflow problems, but has ability to service the outstanding amount mandated by the lending company. In principle, cash pay advance is not made available to people with a history of long financial woes, which simply means an inability to pay.
Securing a cash pay advance is a simple process as it does not require much verification, except for a proof of income.
It is imperative that the cash pay advance received be used appropriately for it’s original intention. For instance if this cash advance is to be used for payment of household or hospital bills, then the cash should be used solely for these purposes and not otherwise. Reasons being when the cash advance is splurged for clothings or other luxuries, then you will be incurring 2 set of expenses, namely the hospital or household bills, in addition to the loan taken from the cash pay advance company which need to be paid on schedule irregardless, per the signed contract.
Bear in mind that the lending company is not a philanthropic group of people trying to help the needy. It is just a company doing a lucrative business of collecting high revenue from the interest charged on the cash pay advance drawn against your pay check. Defaulters of such scheme will be properly sued by the lenders to recover the money owed, often resulting in the accquisition of your personal valuables to pay off the outstanding loan amount.
Now, let me illustrate how a cash pay advance work. Comparing apples to apples and let say you need a $300 Loan.
If you borrow from a payday lender :-
You pay at least $45 every 2 weeks! That’s 390% APR! And after 20 weeks, you’ve paid $450.
With many bank or credit union loans, or even credit card advances :-
You pay $3 every 2 weeks or less! That works out to 26% APR! After 20 weeks, you’ve paid $30.
…AND YOU STILL OWE THE ORIGINAL $300 LOAN!
No partial payments are allowed on most cash pay advance. You pay it off or pay the fee. That’s the trap.
So to avoid the debt trap, consider the following alternatives:-
1. When you need credit, shop carefully. Compare offers. Look for the credit offer with the lowest APR — consider a small loan from your credit union or small loan company, an advance on pay from your employer, or a loan from family or friends. A cash pay advance on a credit card also may be a possibility, but it may have a higher interest rate than your other sources of funds: find out the terms before you decide. Also, a local community-based organization may make small business loans to individuals. Or even contact credit counseling. A counselor can help you get out of debt and avoid a payday loan.
2. Compare the APR and the finance charge (which includes loan fees, interest and other types of credit costs) of credit offers to get the lowest cost. Shop around. Banks, credit unions and finance companies offer alternatives to payday loans, such as credit union cash advances at 1/30th the cost, credit card advances at 1/20th the cost, and small consumer finance loans at 1/10th the cost.
3. Make a realistic budget, and figure your monthly and daily expenditures. Avoid unnecessary purchases — even small daily items. Their costs add up. Also, build some savings — even small deposits can help — to avoid borrowing for emergencies, unexpected expenses or other items. For example, by putting the amount of the fee that would be paid on a typical $300 payday loan in a savings account for six months, you would have extra dollars available. This can give you a buffer against financial emergencies.
4. Find out if you have, or can get, overdraft protection on your checking account. If you are regularly using most or all of the funds in your account and if you make a mistake in your checking (or savings) account ledger or records, overdraft protection can help protect you from further credit problems. Find out the terms of overdraft protection.
5. Ask your bank about overdraft protection tied to a credit card or savings account, but avoid so-called bounce protection programs that can end up costing 1000% interest in fees.
6. Ask your creditors for more time to pay your bills. Find out what they will charge for that service — as a late charge, an additional finance charge or a higher interest rate. And if you need help working out a debt repayment plan with creditors or developing a budget, contact your local consumer credit counseling service. There are non-profit groups in every state that offer credit guidance to consumers. These services are available at little or no cost. Also, check with your employer, credit union or housing authority for no- or low-cost credit counseling programs.
7. If worse comes to worst, compare the cost of late fees. A one time late fee is much cheaper than repeat fees to a payday lender.
Lastly, should you decide on a cash pay advance eventually, borrow only as much as you can afford to pay with your next paycheck and still have enough to make it to the next payday.
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