Cash Advances: Fact versus Fiction
Posted on Tuesday, July 20th, 2010 at 4:08 pm in Helpful Payday Loan Info
Instant payday loans have gotten a lot of bad press. For all the great benefits of payday loans, there are still many people who see them as a bad thing, something that only causes more debt rather than eliminate it. The reason for so much of the negativity surrounding online payday loans is, there are a small number of unlawful payday lenders which have given a bad name to the entire industry. Some people who now may be considering a payday loan are having a difficult time differentiating between all the unfounded attacks on the industry and the truth. With this article, we hope to misspell some of the lies and to give you a better idea of what a payday loan is and what it isn’t.
One fact that often times creates a stir about payday loans is the high APR attached to them. Admittedly, the APR for an instant cash advance may seem high, but you have to consider it within context. First of all, an APR is an annual percentage rate. “annual” meaning yearly. Now, since a payday loan is a quick, small loan advance, usually a payday loan will be repaid within one month, and in some instances less than two weeks. Naturally, an annual percentage rate on a loan term or one month is going to be very high. Just as if you took a traditional bank loan with a term of a few years, the APR will be much lower. But if you took the same loan and changed the term to one month, the APR will jump to a much larger number.
Another misconception is that payday loans only exasperate debt, not solve it. While it’s true that payday loans cannot solve your debt problems, they are simply meant to give you a cash advance when you need money, then are paid back following your next paycheck. There are fees associated with payday loans, but any reputable lender will be upfront with those fees and other loan terms.
It’s important to make sure you understand the loan terms and do your research before applying. When done right, a payday loan can be a great way to get quick cash when you need it.
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