Many people consider cash advance as a medium of getting by till their next pay check arrives. Indeed, this money lending system has proved quite advantageous for middle class people who cannot meet their unexpected expenses with the regular savings. It is not that only people with low income brackets are tend to borrow fast cash for their urgent needs. The research by the Personal Money Market says that people with annual income ranging between $20,000 and $50,000 are the major payday loan seekers. Also, majority of these people have their own homes and at least high school education. So, contrary to the belief that payday loans are meant for the poorer strata of the society, it is a lending system that can be availed by any person in need.
While cash advance is a convenient system of getting online loan, one must not overlook the fact that this is one of the most expensive forms of credit. So, measures should be adopted in advance in order to avoid the pitfalls.
Cash Advance Loans: Precautionary Measures
While obtaining fast loans from an online lender can help you in a number of financial situations, care should be taken in order to avoid its dangerous repercussions. Keep the following things in mind to ensure a safe loan deal:
-
Find out the best lender firm that works on certain ethics. A renowned lender will never cheat you in the name of lending money and will also make all the payback rules clear before advancing you required cash.
-
Enquire about the legalization of a company before borrowing money from it. The federal and state government has imposed certain rules and regulations on the working of money lenders. Check out if the company you are going to deal with adheres to these regulations.
-
Find out what others are saying about the company. For this, you can either enquire from their previous customers or check a word about them online. If a company has any complaint filed against it, it would reflect on the website of the Better Business Bureau (BBB).
-
Check the interest rates levied by the company on different term loans. Also, inform yourself of the prevailing interest rate. If a company charges much higher interest rates than usual, this might be an indication of company’s unruly behavior. Such a lender company may land you in serious debt trouble in future.
Interest Rates on Cash Advance
Normally, companies charge 10-15% interest on short-term cash advances. The pay-off duration for such loans is two weeks. Any time period above this will lead to a higher interest rate. Sometimes, interest rate gets doubled (30%) if loan period extends to one month. Gradually, this interest rate keeps on rolling up and reaches to the surprising 360% for a year without your knowledge. Hence, you end up paying ten times more than you actually got.
Save yourself from such debt trap by having a clear word with the lender regarding interest rates. A company that follows state policies in terms of interest rates will never cheat you. So, it is always advisable to borrow loan from a reputed firm.