A cash advance and payday loans are my topics I want to go over today with all of my valued readers!
How the two go together and how they are different from each other, and why you should never combine the two are points I really want to stress to anyone who may be considering taking out either type of loan.
I want to show how the two are sold as one loan and how they are different from each other, and why you should never combine the two!
The big push today by the payday loan companies is to sell the general public on the fact that they are the place to go to when looking for a cash advance loan and this is simply a misconception.
They are actually the last place I would want to go for many reasons I will go over in this article.
Read on and let’s take a look at both types of loans and see what the differences are!
Cash Advance Loans
These loans are sold as high-interest short term loans and are the same as a payday loan and this is simply not true.
Originally, cash advance loans were set up as one time advances that would loan you an advance on your next payday.
These loans would be high interest like the payday loans, but the differences end there.usually to borrow $150.00 for two weeks would cost you around $50.00 in interest and $15.00 in counter fees and your payback would be in the form of a check post dated to your next payday for the loan and the interest and counter charges included.
Usually to borrow say $150.00 for two weeks it would cost you around $50.00 in interest and $15.00 in counter fees and your payback would be in the form of a check post dated to your next payday for the loan and the interest and counter charges included.
On that next pay day your check would be presented to your bank by the loan holder and your bank would cash the check and that would be the end of it.
If for some reason the check would end up bouncing you would then owe the lender that check amount plus a bounced check fee to both the lender and your bank and they would even offer you a payback schedule if you needed time to pay this balance off.
Your bank overdraft charge would hopefully not cause havok at your bank when it is charged against your account, but that is the risk of bouncing a chec
All in all, this seemed to work pretty well for the most part.
People who were using this service were mostly not able to take out a regular loan due to poor credit and so they would go this route.
All you needed was proof of a paycheck and a checking account and you were in.
Along comes the payday loan industry with all kinds of new ideas to market their services that put the customer in grave jeopardy of getting caught in the payday loan trap, also created by these wonderful people and in which we will get into here in a minute.
Now this new entity is pushing the ability to extend your payday loans by just paying the interest charges on your loans and thus extending them to your next payday and setting you up on them being able to directly access your bank account!
This has now created huge interest payments on what you borrowed and before you know it people are extending these loans on average 4 times before they pay off the loan in full, thus paying full interest charges 4 times over just to keep the payday loan companies from banging their checking accounts over and over once the loans default.
This has also lead to interest rates of upwards of 1000%!
Yes, I have the number of zeros right!
People are even resorting to taking out more payday loans to cover their initial loan payments, and some have even had to file bankruptcy because of these practices.
This is what the industry calls the payday loan trap and if you have ever seen anyone deal with this you know it is indeed a trap.
We have covered the definition of what a payday advance is and what a payday loan is and we strongly suggest that people steer clear of both types of these loans.
There are alternatives being worked on every day that involve low-interest short-term loans through regular lending facilities that can take the place of these types of loans and we strongly suggest checking into them.
Credit Unions are also coming up with alternatives to these types of loans and should be investigated.I hope this helps you define what these loans really are and helps you in deciding whether to get involved with these companies.
I hope this helps you define what these loans really are and helps you in deciding whether to get involved with these companies.
I hope this helps you define what these loans really are and helps you in deciding whether or not to get involved with these companies.
If you have out of control payday loan debt please see our link below for our recommendation on how to deal with this debt!