Be Aware When You Take Out Payday Cash Loans
You hear and see them everyday – ads on the TV, radio, bulletin boards and on the internet promoting payday cash loans.
- "All I need is a little cash until my next paycheck!"
- "Get cash fast! $100 or more! Money until your next payday!"
These cash loans are known by several different names: payday loans, payday cash loans, cash advance loans, and many more. They are quite popular with Americans at this time, but this service comes at a high price.
You see, many companies are offering cash loans. Check cashers, financial companies and even your regular banking institution will make you a small, short-term loan. However, these loans usually have very, very high interest rates!
These cash loans usually start with the borrower writing a personal check payable to the lender. It will be for the amount borrowed plus a fee. All the lender has to do is hand over the cash the person wants to borrow (the amount of the check minus the fee) and hold the check for a week or two. The actual amount of the fee varies from lender to lender, but almost all of them charge a percentage of the value of the check or a flat fee per amount borrowed. If you cannot pay back the cash loans when they come due, you can extend or "roll-over" the loan. When you roll-over the loan for another week or two, that percentage or flat fee will be charged again. (For every extension you take, you will be charged that percentage or flat fee!!!)
So, if you look at the fine print when you take out payday cash loans, you will see that it is a very expensive form of credit. Think of the following example:
You write a personal check in the amount of $115 to a lender to get $100. The lender agrees to hold the check for 2 weeks (14 days), which is your next payday. After the 14 days, the lender deposits the check.
In that example, the fee for borrowing $100 was $15 for two weeks. That $15 is a whopping 391% annual percentage rate!!! (Think of your current credit cards and how you cringe at a 21% APR!) If you would happen to need to roll-over the cash loans three times, you would actually be paying $60 just to borrow $100!
As you can see, payday cash loans may be fine for getting you though tough financial times occasionally. For regular borrowing, though, you may want to look into a more traditional credit line through your bank or another lender. The annual percentage rate will be much more reasonable and you won't be paying so much to borrow so little.
Richard Jenkins is the marketing directory of MGA
Cash Loans. For more information on their no fax cash loan services, please visit http://www.mga.org
