How Do Payday Cash Advances
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By Hannah Spaulding |
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Payday cash advance loans are essentially short-term loans that may
use a borrowers paycheck as collateral. Working individuals who are
mainly dependent on their paychecks for money may occasionally find
themselves in a spot where an emergency requirement arises and the
next paycheck is still far away.
In such instances, lenders
offer cash advances to adult individuals with an assured net income
of at least $ 1000 per month. The loan amount is to be repaid by the
borrower in full on the next payday. Cash advances charge a rate of
interest of up to 20% and should ideally be taken in small amounts
so that they can be repaid easily. The high rate of interest is
charged as these loans are short term and given without a credit
check. Most lenders offer a first-time payday cash advance of up to
$1000.
The process of applying for and obtaining a cash
advance is automated and can be carried out online. The borrower is
required to submit a short application, which is usually replied to
via email. The money is transferred to the borrowers account upon
the signing of the loan agreement and submission of postdated
checks. Alternatively, the lender can directly withdraw money from
the borrowers account on the designated due date. Inability on part
of the borrower to pay the loan in full may imply a violation of the
loan agreement which can prompt the lender to demand non-sufficient
funds (NSF) costs. If a lending agency chooses to refer a borrowers
poor payment record to the credit bureau, it can harm a persons
credit score and affect his chances of obtaining a loan.
Ideally, a person should refrain from taking payday cash advances
often as these incur a high rate of interest. They should be kept as
the final option when loans from friends cannot be availed and
credit cards cannot be used. Factors that affect the approval of a
payday cash advance include federal and state lending regulations,
net income, and existing previous payday advances or other loans.
Usually payday cash advances are scheduled for payment 15-18 days
from the application date. Individuals can avail only one payday
cash advance at a time from a given lender.
Lenders allow for
an extension of the payment date and deduct an extension of payment
fee on the original due date. There is a limit to the number of
extensions allowed by the lender. Most allow up to four extensions
of the payment date. The next scheduled date for repayment is
usually the date of receiving a paycheck. |
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