Cash Advances And The Way They WorkSome of the most frequently used financial products today are cash advance loans. These loans are so popular that there are thousands of retailers available that supply these types of loans to those that need them. Cash advances are considered to be some of the easiest loans to obtain and borrowers generally have the money that they need the day after that they apply for the loan. This doesn't mean that people should be complacent when looking for their loan, always try to look for a quality lender or aggregator. If you are considering obtaining a cash advance, there are some things that you should know to help you make the best choice for you and your situation. Here is some information that can assist you in making the right decision.
What Is A Cash Advance?
A cash advance is a short-term loan for an amount that is usually less than $1,000. These loans are extended for a relatively short period of time, typically the length of a two-week pay period. At the end of the loan term, the entire amount of the loan and the added fees must be repaid to the lender. These loans are designed to help people that have no other means of obtaining the funds that they need quickly and are marketed to those that do not use credit cards and cannot qualify to receive a personal loan.
What Are The Requirements For A Cash Advance?
While the requirements for a cash advance can change from lender to lender, there are several criteria that most lenders look for before extending a cash advance to a borrower. All borrowers must be able to prove that they are currently employed, typically by displaying a recent paycheck stub, and have a valid checking account. No loans are extended to anyone under the age of 18 and the borrower must have some form of identification that shows that they are who they say they are. Some lenders require a credit check as well, but most do not.
Reported Issues With Cash Advances
One of the biggest issues with cash advances is that the short repayment term does not give people very much time to come up with the additional money that they need to pay off the loan. If they cannot absorb the entire cost with their next paycheck, they often take out another cash advance to pay off the first one. This can lead to a vicious cycle of debt, with the borrower paying hundreds of dollars in fees and interest payments to the lender for taking out loan after loan. While the fees and interest charged for a cash advance may seem reasonable to someone that really needs the money quickly, calculating the amount results in an effective annual interest rate in the triple digits for the loan.