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Payday Advance
Sometimes people get into unexpected circumstances such as a medical emergency. These are times when people need more money than what we may have at the moment. Though every worker receives wages or salary on his or her payday, the amount of money earned may not be enough to meet unexpected financial needs.
Is there a way out in such circumstances? Yes, there is a way out, provided by ?payday advances.? A payday advance is the timely assistance rendered by financial institutions to people who need money between their paydays.
A person in dire need of money in between paydays can approach a financial organization that handles payday advances for such a loan. When he or she applies for the advance to the financial organization, the latter studies the application, decides whether to approve it, and then communicates this to the applicant. Most payday advance firms approve advances for a two to four week period. Most payday advance firms require the applicant to be in employment for at least 3 months, have a checking account with a bank for at least 3 months, and earn a monthly net income of $1000 after all deductions.
Though payday advances are a boon in emergency situations, the interest rates charged are usually very high. When a payday advance period is renewed, the interest rates become even higher. Thus, payday advances are more expensive than other forms of short-term credit such as a loan from a bank or from a family member or friends, a credit card cash advance, an account with overdraft protection, or a salary advance.
Because of the prohibitive interest rates usually associated with payday advances, it is best to consider such an advance as only a short-term solution to an unexpected financial need. It is not intended for repeated use in meeting usual expenses from one payday to another. Because of the very high interest rates, repeated or frequent borrowing of payday advances can cause serious financial hardship for the borrower.
Processed online as well as offline, payday advances are short-term (2 to 4 weeks) loans. Because they carry extremely high interest rates, such advances should be used sparingly and with great caution.
Bad Credit Payday Advance
Suppose a person has a bad bank credit history. Will any lender ? creditor come to his assistance when the person needs a Payday Advance? The answer is yes. There are many financial institutions that accept applications from such individuals. These institutions study the application without a credit check. Can they afford this approach? How do they view Bad Credit applications?
Let?s imagine two people, Abe and Alison. Let both of them borrow $100 from a lender ? creditor that charges $10 per $100. [Usually financial institutions charge at least $10 to $20 per $100]. Abe has no Bad Credit experience, as reflected in his bank statements and other relevant documents. Alison couldn?t repay a previous loan and has a Bad Credit history.
How much will the lender charge them, say, by the ensuing payday? $110 from Abe and $125 from Alison. That is, the interest accrued on the amount lent to Abe and Alison would be $10 and $25. In other words, though both borrowed the same amount, Alison repays a higher amount.
If for any reason, the repayment is not done on the due date, steps are taken to get back the entire advance amount [principal plus interest fee] from the customer. And next time the borrower approaches the lender, the latter will probably say, ?Sorry, no credit from you, hence no credit from us.? Hence it is always better to keep your credit history clean, as this is the best approach for most economic payday borrowing during an emergency.
Emergency Payday Advance
Payday Advance companies often come with enticing ads such as E-Z Payday Cash... ?Cash at your doorstep on the same day..? etc. on the FM, TV, Internet, and in mailboxes. And they come up with a range of words such as cash advance loans, check advance loans, or deferred deposit check loans. They are indeed easy to secure. But are they economical?
Lets imagine someone named Ellen borrowing $300 from a lender ? creditor for a two weeks period. According to the agreement, she writes a personal check to the lender for $345 (this includes the borrowed amount $300 and a $45 fee).
In the above example, the interest fees of $45 is the equivalent of $1,170 for a year, or 390 percent APR. This is far higher than the APR announced by institutions such as Bank of America for loans. But the latter require collaterals, real estate to mortgage or some other security. Not easy for everyone.
On the ensuing payday, she either redeems the check by paying the $345 in cash, or lets the lender withdraw the amount, by using her personal check, from her bank. Some times she may roll over the check by paying an additional fee to extend the advance period, say, for another two weeks. In case she?s left with no money in her account to cover the personal check she submitted to the lender, she could incur additional bank fees or face legal action, for the bounced check.
It is advisable to plan finances carefully by following a few steps as follows: calculating the total `income? and `expenses? amounts in a month, subtracting the `total expenses? from `total income? and monitoring the remaining amount. This simple arithmetic will tell us as to whether the person has some savings or not. A financial barometer!
By depositing 10% of the total income into a savings account or other kind of investment. This will serve any `rainy day?.
By not spending more than what is earned.
Despite meticulous planning, we do sometimes get into emergency situations like Ellen. This is the time, when we can look for an Emergency Payday Advance as the last resort.
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