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Payday Advances: What Every Consumer Should Know

       What should be considered before getting a cash advance? First, it is important to understand what they are. Payday cash advances are short term loans made to borrowers. The loans are made by check, or electronic transfer from a loan company to the borrower's account. Many take advantage of payday loans to cover necessary bills or emergencies that arise between paychecks. Generally, the borrower has to pay a finance charge. Cash advance loans are paid back in one of two ways. One way is that the borrower has to agree to repay the amount in full with their next paycheck. Sometimes this is done by writing a post-dated check for the full amount including the finance charge. The other way is that the borrower can make monthly payments with compounding interest.


         The ease with which to receive payday loans draws many a potential borrower. A person can walk into any cash advance loan store or find one online. The lender will require some form of ID and verification of employment. After filling out some paperwork, the borrower leaves with the funds in hand or they are transferred into a bank account. 


        With the use of the internet, borrowing money has become even more convenient. Literally thousands of online payday loan websites offer instant approval and no credit check. Applying online requires filling out an application and submitting personal information including employment information, bank account number, and in most cases the social security number. Cash advances range from $200 to $2,500. All loan stores have finance charges. Finance charges range from $10 to $100. Depending on the amount of money requested, the transfer will take place overnight. Generally, if more than $500, the transfer will take longer. Most will also allow the borrower to extend or "flip" the amount that cannot be paid back right away. The amount paid back is substantially higher than the original amount borrowed.


        Unexpected bills and family emergencies happen, and in this way cash advance stores and websites actually help people. Some say that getting a cash advance is no different than getting a loan from the bank, or opening a credit card, except that the rates are different and a credit check is unlikely. Payday lending is not permitted in some states while others have their own laws regarding how lending should be regulated.


       Payday loans, like any other type of loan, have their place. The level of responsibility that applies to getting a mortgage, credit card, line of credit, or buying a car, also applies to getting a cash advance. Each person needs to do research, read all the fine print and understand all the finance charges. They should not borrow money when they know they cannot pay it back as agreed.

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