For some people a cash advance/payday advance can be a good or bad proposition, dependent on which way you look at this type of short-term loan. The most appealing aspect of a payday advance is that it affords you opportunity to have the cash in your bank account without any unnecessary delay. You simply won't have to hang around for days or weeks to get approved. This can be particularly useful if some financial crisis or other has reared its ugly head and you're in need of some cash without delay.
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A payday advance can be a superb means of getting the funds that you require when you're confronted with some bill or other that requires immediate payment. It's a way of having the funds to pay for something on a right now basis and not having to worry about repaying the loan until you can better afford it, after you've got your paycheck.
Different lenders have different repayment options. Some demand that the loan is repaid within two weeks whilst others want the loan settled within thirty days.
Payday loan companies aren't usually interested in an applicant's credit history and only require that a few criteria be met before approving a loan. In most cases these are: you must be or older than their minimum age. You must be a resident of the country where the loan is applied for, you must have a regular source of income and you must have a bank account with a debit card. In most cases that's it.
There is a downside, for having a hassle-free loan application process; you'll be charged a substantial amount of interest. The amount of interest may be up to almost 30 percent of the sum loaned. I'm sure that you will agree, it's rather a lot, but when people are desperate for money this doesn't appear so horrific.
If such a thing exists as a good cash advance (the interest rates are the bad part), you'll need to fully repay it at your earliest convenience. Doing so will save you a tidy sum of money long term. If you're not careful, it could be so easy to get wrapped up in a cycle of attaining a loan, repaying it, and then having to take another one out straight away. This would be vicious circle that once begun would be exceedingly difficult to rid yourself of.
Various cash advance loan companies require that you partake of a rest period before taking out further loans. That being said, if one company won't lend you the money when you want it, there's always another one that will. There have been noted instances of borrowers taking out loans in order to pay off previous loans. They finally end up in a state where, even with the best will in the world, it's just not possible to straighten themselves out.
Allow me to show you an example. Let's say that someone takes out a loan for £100 at an interest rate of 29.98 percent (not uncommon). When the loan is to be repaid the borrower will have to come up with £129.98. But if they simply can't afford to repay the loan and then take out a subsequent loan to repay the first one, their new loan will be for 129.98 plus interest at 29.98 percent (£38.97). Which now adds up to £168.95. If they then can't afford to repay the latest loan and have to take out yet another one, this will add up to: £168.95 plus interest at 29.98 percent (£50.65) now equals £219.60.
As you can see, if this particular person was with a loan company that worked on a fortnightly repayment schedule, within six weeks, they would end up owing well over double the amount that they borrowed in the first place. This kind of situation would be a nightmare for anyone who found themselves in it and unless extreme caution is employed, one that would be so easy to fall into.
In summary, the best way in which to use a loan of this nature is to take one out only in a real emergency and then pay it back in full either before or when it becomes due. And don't take another one out unless some other emergency rears its head. When used in this way, payday advances can be a lifesaver but only when used in this way.
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