How Much Does An Online Cash Advance Cost?At one point or another, most Americans feel financial pressure. Bills stack up and cars or homes need to be repaired. In the current unstable economy, many families find it hard to pay bills, cover surprise expenses or put enough food on the table. Although unemployment rates are steadily dropping, plenty of individuals are still out of work or stuck in hourly jobs that pay too little to support a family. In desperate times, some people turn to desperate measures. Payday loans, also called cash advances, are a common remedy sought after by many families when times are tough to make ends meet. But what is the true cost of a payday loan? Is it a solution to a problem or simply a Band-aid on a growing wound?
A payday loan is essentially an advance on your paycheck made by a third party provider. Many payday loan companies exist and there are dozens of websites you can visit. The requirements for obtaining a payday loan are quite loose. Most companies want a way of confirming identification with a social security number and proof of residence and need to see proof of income, like with the information from a pay stub. The cash advance provider will then extend you a loan based on the amount or partial amount of your weekly or biweekly pay stub transferred right to your bank account from the comfort of your home. Sounds easy, right?
The reason cash advances seem so desirable is that they offer a quick solution to an ongoing problem. Many struggling Americans, however, buy into the idea without understanding the true costs of a payday loan. There are high fees and steep interest rates that come with the convenience of getting paid a few days early. Most cash advance providers will charge anywhere from $15 to $50 for the convenience of the loan, and interest rates can be 50% or higher. Some payday loan companies seemingly offer deals if you secure a loan online but these transactions often come with processing and handling fees on top of similar interest rates that render the so-called bargain worthless. Other providers will make you pay a small fee just to apply. The duration of most payday loans is two weeks or less, leaving little time for struggling individuals to come up with the cash to pay back the principal and the interest so quickly. If you are late paying back an advance, the already high interest rate will rise considerably.
Payday loans seem like a convenient way to help make ends meet for struggling families but in reality, this couldn't be further from the truth. An individual will take out a loan, be unable to pay the interest and fees on time, and will resort to taking out a second loan, and then a third. In many cases, it turns into a vicious cycle for people without the financial means to escape. Although it may seem harmless and convenient, cash advance companies prey on people without other options. Don't be fooled: the steep price is far too costly for the potential benefits.