You may have seen a lot of advertising lately by companies large and small. They're offering easy to get "payday loans" or "no fax cash advance" loans, and military payday loan.There has also been a lot of press interest in the subject citing the blossoming big money industry as the latest home of the bully boy loan shark.
So what is a payday loan?
The payday loan is the latest brainchild of the finance industry, meant for individuals, in gainful employment who, for whatever reason, are in need of a cash advance loan until their next pay check. Often this "tide you over" loan of just a few hundred dollars is enough to see you through to your next payday. On occasion a person may incur an unforeseen expense that their savings can't cover and they need a quick loan, for instance to cover the cost of an emergency plumbing repair. Since banks are often unwilling to lend small amounts of money quickly, they know that the no fax cash advance payday loan is an option they can turn to for fast loan approvals.
Many payday loan companies can offer more or less instant loans to people who feel they need the money today, without the encumbrance of credit checking, faxing, and endless form filling or securities other than proof of employment and a bank account.
Emergency situations requiring the need for a quick, no fax, short term cash advance loan can happen to anyone. When they do, who has the time to wait for endless credit checks and document faxing before getting the cash you need?
Although there has been an outcry over the fees and interest rates demanded by some lenders, being referred to by some as nothing short of usury, cash advance loans from PaydayCash.org is much more affordable that even a bounced check fee. Typically a person approaching a payday loan company can expect to have to pay back $120 to $125 for every $100 dollars borrowed, the debt can also be carried forward by paying the interest only and making a new agreement to pay a month later. For a comparison of fees click here.
It's these kind of deals particularly that critics decry as carrying the equivalent of anything up to a 400% APR Of course these kind of claims would only be true if a loan was left in a carry over mode for the year, which is generally unlikely to happen although it does highlight the fact that these kind of loans are strictly short term solutions, and the borrower needs to be pretty certain of at least their short term job security.
Where as an unforeseen short term need might be a legitimate reason to take out a pay day loan, it is not a wise solution to an ongoing short fall in a persons monthly income, in which case, a reassessment of the household accounting might be more appropriate. Take a look at your outgoing utilities and find if they are normal for your kind of household. Check energy consumption i.e. use of gas, electric, fuel, do they seem reasonable? Maybe your employment has a seasonal aspect to it and you could plan to make small regular savings to supplement the leaner periods.
Armed with good accounts and a sound knowledge of your requirements you may find it easier to acquire a consolidation loan from one of the big lenders that would reduce your monthly credit card payments and offer you a preferential percentage rate.
Finally if you do need a cash advance payday loan, and can't find any other solution, shop around the fees do vary as does the treatment by lenders of some borrowers who find themselves unable to meet their commitments. Have a fall back plan even if that means asking a relative to bale you out for a week or two. It will be less painful than defaulting on the loan but most of all be brutally honest with yourself if harder long term decisions are needed; start making them now.