Pay Check Advance: Service Review
A pay check advance is an increasingly popular service that provides customers with an amount of cash until their next payday. The amount is then repaid on the due date, with interest added on top. Other names for this service include cash advance and payday loan. This article looks at the process involved and whether this service is a good financial option.
The actual service could be better classed as a short-term loan, as the lending period is not usually more than one month in duration. The loan amount is also far less than most personal loans, and is usually between $100 and $1500, depending on the provider.
Though an increasing number of city centre stores are offering this service, it is the Internet which is by far the most common ground for this type of lender. The application forms can be completed online, and a decision reached in minutes. If successful, the money is usually transferred into the applicant’s bank account within 24 hours.
There are many reasons why an individual may require a pay check advance. The most common reason is that the customer has overspent during the month and needs an amount to cover their household bills or a scheduled loan, credit card or rent/mortgage payment.
For this reason a payday loan makes good sense, as it is far preferable to take out a small loan than to miss a card payment, be landed with a $30 plus late payment fee and receive a black mark on your report.
Unlike many other types of loans, the applicant does not have to have a good credit record in order to be accepted. The actual requirements can vary, but the main stipulations are usually that the customer has to have a job that pays at least $1,000 per month, and should also be at least 18 years of age. Proof of these is required during the application process.
The downside is the amount of interest charged is relatively high, considering the small length of time involved. A typical example is $27 interest being charged on a loan of $300 for a period of one month.
For the above reason it is only recommended that you take out a pay check advance as a short-term solution to an unforeseen circumstance. Products such as these are not designed as a long-term solution to financial problems, and can result in extremely high interest charges if used in this way.
For longer-term financial situations a low APR personal loan represents a far better option, but those with a monthly cash deficit should first sit down and analyze where they can change their spending habits, before taking the step of making any credit applications.
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