Cash Advances are Meant for Financial Emergencies
Posted on Thursday, August 6th, 2009 at 8:06 pm in Financial Planning, Helpful Payday Loan Info
It’s quite easy to obtain a cash advance – also known as a payday loan – either online or from a cash advance store. You just need to have a steady job or other source of income that pays at least $1,000 a month, as well as a bank account. Of course you also have to prove your identity and maybe provide a utility bill or similar document to verify that you have a permanent address.
A cash advance can be exactly what you need to pay for a large bill that you hadn’t reckoned with. For example, your car might need vital repairs, your child might require urgent surgery, or maybe you have a burst pipe in your basement. These are the type of emergency situations cash advances were designed to cover.
The usual way to pay back your cash advance is to have it deducted from your next paycheck, although you can normally extend the term by paying another fee. It is meant strictly as a short-term source of funds, though, as the fees charged make it incredibly expensive to carry the debt long-term. Don’t fall into the trap where you keep having to roll over, or extend, your cash advance.
For instance, if you borrow $300 and the fee is $20 per $100 for each two-week period, the loan will cost you $60 per two weeks. That translates to an annualized percentage rate (APR) of 520%, which you obviously can’t afford to pay for very long. Theoretically, you would therefore pay $1560 in interest on a $300 loan, if you held it for a whole year! In most of the United States, there are laws against extending your cash advance loan more than once or twice, and for good reason.
Now you understand why it’s important not to apply for a cash advance to pay for something that isn’t a real emergency. Many people ‘forget’ about the high cost of repaying the loan and succumb to the temptation of fast, easy cash. They roll over their loans, or take on new ones frequently, and spend the money on electronic gadgets, vacations, clothes and other non-essential items. This is one of the quickest ways to get yourself into very deep financial trouble, so be warned!
If you regularly use the money from a cash advance to cover your basic living expenses, you’re also borrowing for the wrong reason. When your problem is simply making ends meet month after month, a cash advance is not what you need. You must find a way to bring in more money from employment, government benefits and/or other financial aid. Do you qualify for food stamps, state rental assistance or a low-cost ‘lifeline’ utilities account? Check out the GovBenefits.gov site for links to all the financial aid programs in your state.
Use your favorite cash advance lender when you’re in a temporary tight spot due to an emergency, make sure you pay the advance back quickly, and you’ll find your cash advance to be a real friend in need.
Related posts:
3 Easy Steps to Get Your Quick Cash
Complete the short form.
Receive your approval and confirm loan.
Cash deposited into your account.
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