What is a cash advance? A cash advance, which is also known as a payday advance, is a small unsecured short-term loan. These loans are not issued by traditional banks or credit unions, instead they are issued by small and large companies dedicated to cash advances. Each loan has a maturity date and a fee. The maturity date depends on the frequency of your payday, which is every 14 days for the majority of us. The fee depends on the amount of the cash advance requested. The amount of the cash advance is limited to what your state allows. To know what your state is allowed to advance, you may visit the National Conference of State Legislatures at www.ncsl.org
Who can apply? Anyone who is 18 years or older, who has a checking account, and a source of income. This may include people that are on disability, SSI, and recipients of unemployment benefits.
How does it work? You provide some basic information to apply, write out a personal check for the advance amount plus the fee, and you get the amount of the face value of the check minus the fee. For example: if you want $100, you write out the check for $117.50 and the store gives you $100. On your payday you bring back $117.50 and they return your check.
What is the interest rate? The interest rate, which should be disclosed as the Annual Percentage Rate or APR on every loan, depends on the amount that you borrow. For example if you borrow $100 you would pay back $117.50 on your next payday. Don't make the mistake of thinking that the interest rate for this example is 17.50 percent, you're not that lucky. Remember the loan is due on your next payday, which is usually 14 days for most Americans. So if you pay $17.50 every 14 days, in one month you would have paid $35. In one year you would have paid $420 on fees alone! Not shocked yet? The interest rate is 456.24% on a $100 loan that you paid off in 14 days!
The APR is even greater if you need the money right away and your next payday is in 5 days. The store is not going to give you 14 days if you get paid in 6 days. They will seize the opportunity and give you the loan and have you return in 6 days. You may not know it but at the end of the month the store manager will have to give a performance presentation where a higher interest collected will reflect good on his or her store. Here is an illustration:
What happens if I don't pay? I you don't pay on the day you are due the company will deposit your check whether you have funds or not. When you return to pay you will also be charged a return check fee which can vary from $15 to $35 depending on the store. If you ask kindly and they want to re-advance (give you another loan) you they may waive the fee. Now if you don't come back voluntarily and payoff your loan they will call you at home, at work, at a reference number, on your mobile number, and they will mail you collection letters. Also do not be surprised that they will come knocking on you door (I used to do it) asking for a payment. Please note that there are laws in place to protect you from being harassed. For instance they can not call you on the same number twice. When leaving a message they cannot divulge the nature of a the call.
Where can you find a cash advance center? Your best source is Google. Make sure the location you select is a member of the CFSA Community Financial Services Association America and that they abide by the CFSA best practices: 1) Full Disclosure 2) Compliance 3) Truthful Advertising 4) Encourage Customer Responsibility 5) Rollovers 6) Right to rescind 7) Appropriate Collection Practices 8) No criminal action 9) Enforcement 10) Support Balance Legislation 11) Extended Payment Plan 12) Internet Lending 13) Display of the CFSA Seal.
Can a payday advance trap you in a cycle of debt? This can be a controversial question depending on who you ask. If you ask a payday advance company you will get a resounding NO. If you ask payday advance customers you will get mixed responses. But if you ask someone like me who worked as a store manager for over 10 years for one of the biggest corporations, here is my answer. The system is designed to trap you. From the moment you walk into the door to the moment you leave each employee is trained to make you feel at home, to make you feel like family, the information they collect from you will come in handy when you stop going. They will mail you postcards, they will call you when there is a promotion, and they will call you before every holiday to remind you where you can go for cash. These companies will never admit it but they thrive on repeat customers who fall into a cycle of debt. They are no different than any other business.
My advice to you is to live within your means and to save for a rainy day. If that is not possible and you need to get out of a bind the next best thing is to swallow your pride and ask a friend, relative, co-worker, or your boss for a loan. If you must use a payday advance do not fall into their trap and use it only as a last resort.
Who can apply? Anyone who is 18 years or older, who has a checking account, and a source of income. This may include people that are on disability, SSI, and recipients of unemployment benefits.
How does it work? You provide some basic information to apply, write out a personal check for the advance amount plus the fee, and you get the amount of the face value of the check minus the fee. For example: if you want $100, you write out the check for $117.50 and the store gives you $100. On your payday you bring back $117.50 and they return your check.
What is the interest rate? The interest rate, which should be disclosed as the Annual Percentage Rate or APR on every loan, depends on the amount that you borrow. For example if you borrow $100 you would pay back $117.50 on your next payday. Don't make the mistake of thinking that the interest rate for this example is 17.50 percent, you're not that lucky. Remember the loan is due on your next payday, which is usually 14 days for most Americans. So if you pay $17.50 every 14 days, in one month you would have paid $35. In one year you would have paid $420 on fees alone! Not shocked yet? The interest rate is 456.24% on a $100 loan that you paid off in 14 days!
The APR is even greater if you need the money right away and your next payday is in 5 days. The store is not going to give you 14 days if you get paid in 6 days. They will seize the opportunity and give you the loan and have you return in 6 days. You may not know it but at the end of the month the store manager will have to give a performance presentation where a higher interest collected will reflect good on his or her store. Here is an illustration:
| Loan Advance | Fee | 14-Day Term APR | 6-Day Term APR |
|---|---|---|---|
| $100 | $17.50 | 456.24% | 1064.58% |
| $150 | $26.25 | 456.24% | 1064.58% |
| $200 | $30 | 391.07% | 1064.58% |
| $255 | $45 | 460.08% | 1073.52% |
What happens if I don't pay? I you don't pay on the day you are due the company will deposit your check whether you have funds or not. When you return to pay you will also be charged a return check fee which can vary from $15 to $35 depending on the store. If you ask kindly and they want to re-advance (give you another loan) you they may waive the fee. Now if you don't come back voluntarily and payoff your loan they will call you at home, at work, at a reference number, on your mobile number, and they will mail you collection letters. Also do not be surprised that they will come knocking on you door (I used to do it) asking for a payment. Please note that there are laws in place to protect you from being harassed. For instance they can not call you on the same number twice. When leaving a message they cannot divulge the nature of a the call.
Where can you find a cash advance center? Your best source is Google. Make sure the location you select is a member of the CFSA Community Financial Services Association America and that they abide by the CFSA best practices: 1) Full Disclosure 2) Compliance 3) Truthful Advertising 4) Encourage Customer Responsibility 5) Rollovers 6) Right to rescind 7) Appropriate Collection Practices 8) No criminal action 9) Enforcement 10) Support Balance Legislation 11) Extended Payment Plan 12) Internet Lending 13) Display of the CFSA Seal.
Can a payday advance trap you in a cycle of debt? This can be a controversial question depending on who you ask. If you ask a payday advance company you will get a resounding NO. If you ask payday advance customers you will get mixed responses. But if you ask someone like me who worked as a store manager for over 10 years for one of the biggest corporations, here is my answer. The system is designed to trap you. From the moment you walk into the door to the moment you leave each employee is trained to make you feel at home, to make you feel like family, the information they collect from you will come in handy when you stop going. They will mail you postcards, they will call you when there is a promotion, and they will call you before every holiday to remind you where you can go for cash. These companies will never admit it but they thrive on repeat customers who fall into a cycle of debt. They are no different than any other business.
My advice to you is to live within your means and to save for a rainy day. If that is not possible and you need to get out of a bind the next best thing is to swallow your pride and ask a friend, relative, co-worker, or your boss for a loan. If you must use a payday advance do not fall into their trap and use it only as a last resort.
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ReplyDeletebridge loans
Cash advance loans are short term loans that can be applied by people who are in need of instant cash. With this kind of loan service, people will never have to worry about not getting enough cash to help them get through their emergency cases.
ReplyDeleteCash Advance in New York
Pay day advance sites, such as Money Mutual, are developed with a particular objective in mind. They were developed to be able to help those with an immediate economical need. Basically, a money loan is for employees who need a little bit of extra money for an unexpected urgent situation, but do not have the money currently because they have other expenses or are trapped between income.
ReplyDeletePaydayLoans