Getting a payday loan is easy. If you are short on cash before your next payday you will be able to raise money from pay-day loan providers. The lenders offer credit options for individuals to prevent more serious cash flow problems, at least until the next paycheck.
Pay day loans often come under different names including: payday advance loans, cash advance loans, quick cash loans, no credit check loans, postdated check loans and many more. All of the name are essentially mentioned the same lending product.
What is Payday Cash Advance?
Payday advance loan is a small amount, short-term, high interest loan that you can use and repay the lender upon receiving your next paycheck. All you have to do is write a postdated check payable to the lender in the full amount of the loan you want to borrow plus the loan fee.
On the maturity date, your lender expects you to repay the loan. If you want to extend the loan repayment there is refinance or “roll over” facility where you can extend the loan, for a fee. But if you don’t repay the loan the lending company may process your check and withdraw money from your checking account.
While most lenders offer quick and easy cash postdated check loans are not cheap. The fees charged by online cash loan services range from $15 to $30 on a $100 loan. If you decide to roll-over the loan three times, the fee would climb to $60 or more.
Reasons to Get a Payday Advance Loan
The first reason for getting a payday advance loan is when you are seriously short of cash and have no other way to get it. In fact, fast cash or no credit check loans are intended for short-term cash flow needs.
Another reason for obtaining a cash advance loan is when you want to pay off other debts with higher interest charges or fees. If you want to avoid a bounced check or a late utility bill fee this loan offers lower total cost of borrowing. For example, bouncing a $100 check may incur a $40 to $60 fee, which consists of $20 to $30 bank fee plus $20 to $30 merchant fee.
Ideally, the second reason, which is to pay off debt with higher interest charges and fees, is the best reason for getting a pay-day loan. Obtaining a quick cash loan is a good credit purchase if the total cost of the loan is lower than the cost of the debt you’re paying off.
Default On Payday Loan
Even though a quick cash loan looks like an economic solution for paying off other debts it is still one of the most expensive loans a consumer can get. So, before going to a payday lender consider all of your sources of funds. Can you borrow from friends or family, get an advance from your employer or withdraw cash from your credit card? Only borrow from a payday loan lender when you have no other way to get extra cash.
If you are in a situation where your income cannot cover a postdated check then don’t get a payday loan for making ends meet. Avoid the “rollover trap” because a cycle of repeat borrowing will only make your situation worse. Instead, try to convert your payday loans to a conventional loan by borrowing the funds from a conventional lender or the above-mentioned sources of funds.
If you have to roll-over the loan make sure that the funds in your checking account can cover your post-dated check. Missing any scheduled payment will cost you a bounced check fee from your bank and extra fees or higher interest rates on your loan, in addition to the original loan’s fee. What’s more, if you default on the payday loan your lender can threaten you with criminal prosecution as a way to get you to pay.