Top Three Questions and Answers about Cash Advance Payday Loans
Here are three of the main questions on people’s minds – along with some informative answers – to help clear up confusion about cash advance payday loans and what they are all about in today’s financial marketplace.
1.How Do Cash Advance Payday Loans Work?
A cash advance payday loan is a loan made to you before your actual payday. The reason that people like these kinds of loans is that it is easy to run out of cash before that next payday rolls around, and once you get tapped out the bills and other expenses pile up and create headaches, stressful decisions regarding household finances, and other kinds of problems. But if you can borrow some money with a promise to pay it back on payday then that can bridge the gap and put money in your pocket when you need it the most.
The way lenders benefit from these kinds of loans is that they charge you a fee or interest for the loan. You get money sooner than you normally would and the lender gets paid for making that happen. That’s the general mechanics of how a cash advance payday loan works.
2.Are Cash Advance Payday Loans a Good Deal or Not?
The answer to that question is that it all depends on your financial situation. Let’s say that you have some emergency money stashed away in the bank, in your cookie jar, or in the form of a line of credit you can access when needed. In that case you probably have no reason to use a cash advance payday loan because you already have yourself covered when you run out of money ahead of payday. These cash advance loans charge high interest rates, and if you have other cheaper ways to get cash then you’ll be smart to use those more affordable methods instead.
But what if you don’t have any other way to get the funds you need to tide you over until your paycheck comes? In that case you might be a prime candidate for one of these loans, because they are tailor made to help people in your situation – who just need that paycheck a week or two ahead of time in order to make it through from one payday to the next without bigger problems. If getting the money this way – even though you have to pay a hefty rate to do it – saves you more money or aggravation in the long run, then it might be a good thing for you. Consider it an emergency source of urgent cash that might not be a great deal in terms of what it costs, but it could pay for itself anyway in terms of lowering your stress levels or preventing you from incurring even greater financial troubles.
3.When Should I Consider Using a Cash Advance Payday Loan?
You should consider using a cash advance payday loan in situations where you have no other options and it will save you more money that what the payday loan costs you.
Here’s a classic example: Let’s say you run out of money in your checking account. You have three checks about to hit the account, and all of them will bounce unless you put $300 into the bank account fast. Payday is two weeks ago, and you have no other way to come up with the cash. You have a choice. You can bounce those checks – and get charged about $25 dollars each plus get a bad report on your credit history file. Maybe one of the checks is for your utility bill and another is for your phone, so you also risk getting your electricity and phone cut off. If that happens you’ll have to pay even more money in the form of penalties and deposits to get those things turned back on.
Or you can go to a lender and borrow $300 with a cash advance payday loan to put in the bank account and cover those checks. When payday comes you pay back the loan and that’s the end of that. No cut-off utilities, no bad checks, and no other penalties or bad repercussions happen. You might pay $50-$75 for your cash advance loan in that $300 example we used. But when you add up all the problems you avoided it makes sense to use that resource to avoid the even bigger and more expensive problems.
That’s the nuts and bolts of cash advance payday loans and how and when to use them to your benefit at times when you’re stretched for cash.
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