Understanding The Ins and Outs of the Payday Cash Advance

Understanding The Ins and Outs of the Payday Cash Advance

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by Rose Martin

Payday cash advance provides access to fast cash in the event of emergency. People who may not have access to a ready source of money can use their paycheck as a way to secure funds. This type of lending should be used to meet short-term and emergency cash needs, but never as a long-term solution to more serious financial problems. The fees associated with these transactions may make them unsuitable for the most vulnerable borrowers.

There are numerous types of payday cash advance loan providers available. These providers are found in the community at check cashing places, specialty stores, or online websites. They all provide the basic service of lending money to individuals who are in a bind and need quick cash.

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To start the process a borrower must be able to verify employment status. This can be done by providing a pay stub or a bank statment showing payroll direct deposit. The documents also serve to show the amount of income earned by the borrower. This proof serves as the basis for how much a loan provider may be willing to lend.

Loan providers will generally require a way to recover their loan, usually via the borrower’s checking account. Checking accounts issued by most banks have electronic transfer ability. With online providers, this allows transmittal of the loan amount within 90 seconds of approval in some cases. The checking account also acts as a way for the provider to recover their loan amount plus the obligatory fee. Through electronic funds transfer, the provider drafts the appropriate amount when the loan is due.

The amount that a provider is willing to make available varies based on the borrower’s monthly net income. This amount may also be based on the frequency or mode of the borrower’s paycheck. The amount borrowed is generally a few hundred dollars, versus in the thousands like more substantial loans. A borrower looking to meet their short-term funding needs should only borrow what they need and can reasonably afford to pay back and no more. A provider will also charge a fee for their service.

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Repayment typically takes place on the next pay date. If a borrower is unable to pay in full, most providers permit a carryover of any unpaid balance. Understand that each time the unpaid amount is carried forward, a new fee is assessed. It is a good idea to pay the loan off as quickly as possible in order to avoid any unnecessary charges. This means that borrowers should only look to borrow an amount in which they can pay back in a short period.

States and other jurisdictions may have limits in place regarding these types loans. A borrower should carefully evaluate the payday loan company they decide to do business with and not be afraid to ask questions. An educated borrower helps avoid problem situations in the long run.

Short-term payday cash advances provide a good resource for many people. When used as intended – to bridge short-term funding needs – they offer a viable solution. Payday cash advances should be used in moderation and only when no other sources of immediate financing are available.

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