Why You Should Never Take Out A Cash Advance Until You Read This First

What are cash advances?

Generally speaking, cash advances are short term loans given to a borrower who needs cash to tide them over until payday. That’s why you’ll often hear these loans referred to as ‘payday loans’.

What should I know before I consider a cash advance or payday loan?

All other credit options should have been exhausted first. These kind of loans are amongst the most expensive way to borrow money in America (the other very expensive kind of loan is a car title loan). The annual percentage rate that you pay for this kind of credit can be as high as 2000% APR. Organizations that offer payday loans or cash advances take full advantage of your urgent need for cash, and therefore it is critical that a loan of this kind is only ever used as a short term loan until your next payday.

How much can I borrow?

The maximum loan offered should be in the region of $500.

What happens if I can’t pay back the loan?

The original loan will attract late payment fees and high interest. Your initial loan of $500 can quickly turn into $800. Non-payment can have severe consequences including the threat of arrest in some States so again, unless you have no other option, we do not recommend this kind of loan. If you do run into trouble paying back the loan, then find a debt counselor in your local area who is experienced in dealing with these companies and can help advise you on the best way to manage your debt.

Are these payday loans legal?

If you sign a loan agreement the loan terms become legally binding and there is nothing to prevent lenders taking advantage of borrowers with no other credit options. There are however rules that all lenders must adhere to, and if you think your lender may be breaking the law it is worth taking advice from a consumer protection office in your local area.