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If you decide on a cash advance loan you have a number of options.
To the dismay of many lawmakers, this form of lending has proliferated
throughout the US and Canada, and those who don't have local access
to a lender can easily find one online. In fact, your online payday
loan options are so abundant that you may have some difficulty
in settling upon a lender. The following are some unique features
of payday loans, and a few guidelines to follow when getting one.
Exactly how high are the finance charges? A typical $250 payday
loan carries finance charges from about $40 to $75, which translates
into an APR of 400% to 800%. Not much of a bargain, but you can
find significant differences from lender to lender.
One criteria you can use to compare payday loan companies is
the maximum amount they will lend. The minimum amount is normally
around $200, with the upper limit being somewhere around $2000.
The precise amount will be determined by several factors including
your income and work history. In many cases you will be able to
increase the maximum amount for which you are eligible by building
a history with the lender. Take care not to borrow more than you
can afford to repay on the specified date, or you will incur even
more finance charges.
How quickly will you receive your money? If you get the cash
advance in person at a local establishment, you will have the
cash as soon as you are approved. Online lenders take slightly
longer, with the next business day being the norm. Some companies
offer money wired into your account on the same business day provided
you receive approval before a certain time, for instance 2:00
pm. You will probably pay more in fees for same-day service.
The minimum monthly income requirement for a payday loan can
be as low as $800, not a big issue for most full time workers.
Most lenders will not run a credit check; however, many of them
use some type of tracking service that verifies identity and other
information given by the loan applicant.
What if you are self employed or living on a fixed income like
a pension or social security? Not all lenders will extend credit
for this type of income, but you can find one with some persistence.
In the event that you receive some non-traditional form of income
that you want considered, the lender will verify the income by
looking at your bank statements.
Do you happen to have access to a fax machine? With many payday
loan companies, you won't need it. "No Fax" lenders
are the norm these days. While some lenders may require you to
fax proof of income, most of the time everything can be verified
online, saving valuable time in getting your money which can be
deposited directly into your checking or savings account.
In the event you cannot pay off the cash advance on your next
payday, most lenders will allow you to roll over the balance several
times. Beware of doing this at all costs, as the already expensive
finance charges can multiply quickly and make the loan even more
difficult to repay.
Despite opposition from a number of lawmakers, the payday loan
industry is booming. These "lenders of last resort"
provide a needed service for a growing segment of the population-
low to middle income workers who have difficulty obtaining more
traditional loans because of their credit history and income level.
Before you choose a payday loan, investigate any and all other
sources of funding available. Choose a lender that has been in
business for at least several years and is up front about all
of their fees and policies. Don't make a practice of using the
loans regularly, and try to avoid extending loans beyond the initial
repayment period. Finally, work to improve your credit score so
that if financial difficulties arise in the future you will have
a less expensive way to deal with them.
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