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Payment Options for Cash Advance Loans
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Mark has been had the same job since he graduated high school over ten years ago. He makes good money and lives a fairly comfortable life, but several bad financial decisions in his past have left him with a few negative marks on his credit report. His brother just called and has asked him to best the best man at his wedding next month and Mark is excited until he realizes that in order to get a good price on the flight to New York he needs to book his reservation this week. With no credit card and not enough money on his checking account debit card, he is worried that he will have to cancel his plans, potentially ruining his little brother’s big day. For a moment he considers asking the bank for a loan, but with his credit score nobody would take him seriously anyway, so why bother?
This sort of scenario can be all too familiar to most of us. Living paycheck to paycheck has become the norm in the United States and with the economy free falling in recent years there just does not seem to be a light at the end of the tunnel. The good news is that despite the credit problems that may loom in the forefront of your mind, there is now a way for normal hard working Americans to have access to quick cash for emergency situations like the one illustrated above. With a cash advance loan –also known as a payday loan – if you can meet a few basic minimum requirements, you can get a loan for those immediate needs.
How do you get a cash advance loan?
All applicants are required to meet specific minimum criteria in order to get their loan application approved. The basic minimum requirement of all loan companies usually states that:
- The applicant should be at least 18 years of age, which is the legal age for being able to enter into a contract in the absence of a cosigner
- The applicant should have been employed for a minimum of three consecutive months
- The applicant’s monthly income should be at least $1,000 and above
- The applicant should have a valid checking account that has been open for at least three months
Though the specific requirements do vary from company to company, these basic requirements are pretty much standard throughout the industry.
Once your loan application is approved, which usually takes just a few minutes; your loan start being processed and in most cases you will receive the proceeds of your loan within twenty four hours. That speedy turnaround time coupled with the easy application process is what has made the cash advance industry one of the fastest growing businesses in the United States today.
Repaying the Cash Advance loan
Now that you have received the money from your payday loan, you need to think about how you are going to pay the loan back. The average term of a cash advance loan is two weeks, though it can vary anywhere from seven to eighteen days. You can’t expect cash advance lenders to be doing all of this out of the goodness of their hearts, after all they are in the business to make money! The payday loan industry charges a fee of about twenty five dollars per hundred borrowed. In terms of annual percentage rate (the cost of the loan over a period of one year), that would be roughly equal to an APR of 650%. All of these numbers will be provided to you in writing before you sign the loan as part of the Truth in Lending Act of 1968, which requires all lenders to give their borrowers a detailed listing of all fees and charges associated with the loan.
At the end of the term on your loan agreement contract, you will ideally repay the entire loan, including the fee. While this is what should happen, you do with most lenders have the option of paying the fee alone and renewing or “rolling over” the loan for a new term. Of course by doing this, you are increasing the fees that you are responsible for and you are getting no closer to repaying the loan itself. If you find yourself in this situation, it is best to pay the fees at the end of the loan term, and pay as much as you can toward the principal amount of the debt. This will reduce your overall debt as well as lowering the amount of interest you will be expected to pay.
Cash advance loans can be a life saver in those situations where you have overextended yourself and need a little financial help in between paychecks. But they can also turn into a dangerous financial black hole if not kept in check. |
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