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Cash Advance Loans: Security Concerns |
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If you need a short term loan for a period less than two weeks and you are unsure whether your credit history would induce a bank to give you a loan, a cash advance loan, secured by your income, is the answer. Before opting for this loan you should be aware of its terms and conditions. The primary requirement to qualify for most cash advance loans is proof of employment, which overlaps with the requirement to provide paycheck stubs to prove your weekly income. Cash advances on the basis of paychecks are only given if the duration of your job has been for at least a couple of months. Moreover, to qualify for the loan, a minimum salary might be specified. The net income requirement would be in the region of $1000 per month. As a direct deposit is needed, you should have a valid checking or savings account that's been open for a few months and into which your cash advance loan can be deposited, and from which you can withdraw the payment when your paycheck comes in. Although these requirements may seem to be too cumbersome, they are meant to protect you and benefit the institution giving you the cash advance loan. Moreover, by ensuring the above requirements the risk factor regarding default on payments by the customer decreases, thereby encouraging the banks or lenders to charge lower interest rates. The cash advance loans travel over Federal Reserve Wire System wires, which ensures your protection by the federal government. This means that lenders can't take more than what you authorize from your account and as such no one can steal your money. Cash advance loans are very useful as they provide convenience to meet any financial requirement at any time. Moreover, you do not have to disclose the reason for requesting for the loan. Most of the time you can face debt problems for paying some of your bills on time and this is where cash advance loans can be very useful. Once you get the loan, you can pay your bills and thereby keep your electricity, phone, or heat operative and when you get your paycheck you can pay back the loan. The very feeling of being able to pay your bills on time instills a lot of confidence and pride. Interest and Fees Associated with Cash Advance Loans The biggest disadvantage of a cash advance loan is that the fees and interest rates are astronomical and anyone would shirk away from it, if there is any other better legal option. Normally lenders talk in terms of over 1000% and the APR (annual percentage rate) becomes sky high. However, since the loan is for a very short period, the interest can't be levied for the whole year and so you may not be paying $10 for every dollar that is borrowed but it might well be in the region of $2 per week for a loan of $1. The fee for the loan is also not cheap and some lenders charge a fixed fee based on the amount you borrow and the term for which you borrow it. For example, if you want to borrow $200 for seven days, you might have to pay $50. The fee is being calculated by some institutions using an APR but it is presented as a fixed fee so that you are not scared of the APR percentages. If you have a longer-term cash advance loan, the APR is effectively lower with a flat fee, but the fee is still the same percentage of your paycheck! You should be careful. Short-term cash advance loans are still the best option in many cases and if you have a poor credit, you can actually improve your credit score by taking this type of a loan and thus be entitled to get a lower interest rate from the bank in the future. You can get cash advance loans up to $1000 within hours, without pawning your valuables or complicating your personal relationships by asking relatives for money. |
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