Payday and cash advance companies allow you to borrow money from your next paycheck. Requirements are that you have identification, proof of income, and a banking account. The consumer simply writes a check for the next pay period, receives cash, and can begin using the money. Sound too good to be true? There are many things to consider with payday loans. The typical fee for using a payday loan is $15 - $30 for every $100 borrowed. The APR (Annual Percentage Rate: interest rate plus any fees included in the loan) is typically very high and can get even higher if you are late paying off the loan. Payday loans are usually for a two week period; the APR can be around 400% and will get larger if late fees are added. It is very common for consumers who use a payday loan to run into trouble having the money available to pay back the loan. When this happens, the consumer is left with two choices.
- Let the lender deposit the original check. If there are insufficient funds in your account you run the risk of bouncing a check.
- Extend the loan by making a minimum token payment (this can range from $20 – $50) and write another postdated check. This will make your balance larger. It may be impossible for you to payback this doubled amount with your next paycheck.
Each loan policy will vary from company to company and even state to state. Some companies will only allow you to get a certain number of loans from them in one year. Some consumers get into the trap of having loans with multiple payday and cash advance companies. This is strongly discouraged. It can lead to serious debt that is very difficult to escape. So if you need emergency cash with good company and service,visit us.