With the state of our economy these days, it's no surprise why people tend to flock to these payday advance establishments. While they are not legal in every state, the ones that they are legal in are getting more and more popular every year. Ever since they first came about, payday advance places have been under fire by those who oppose their services, but at the same time they have also helped thousands of people.
The biggest reason there are so many people who oppose payday advance establishments is because of the outrageous interest rates they charge. These interest rates can often make it extremely hard for the customer to repay the loan, depending on how much they borrowed. The interest rates for payday advance services vary from state to state, but with recent laws passed to help protect the customers, most rates are within reasonable ranges.
Payday advances were designed for people to use on a short-term basis when they are in need of some money before their next paycheck comes. They first started out as stores, but now there are many online companies who provide a similar service. There are many advantages and disadvantages to using payday loan services, and it's important to educate yourself on the subject before making the decision to go for it. You'll want to make sure that this is indeed your best option for the situation you happen to be in, and in this article we will go over all the pros and cons of using a payday advance service. As someone who has used them in the past for several years, I am in a good position to pass this information on to you.
Please note that not everything in this article may apply to the payday advance establishments in your area. Keep in mind that each state has its own rules and some of them are very similar while others are quite different. I live in Ohio and from what I can tell through my research, our laws regarding payday loans seem to be rather common.
Advantages of Using Payday Advance Services
The most obvious advantage to using a payday loan service is being able to get cash in your pocket the same day you request the loan. This can come in extremely handy when you are low on funds and you still have a while before you get your next paycheck.
For instance, perhaps you have a bill due that you weren't expecting and if you pay it, you won't have any money left for food and gas until your next paycheck; or maybe someone's birthday is coming up or you've been slacking on your Christmas shopping. Another common problem is having issues with your car such as needing a new tire or some repairs. In any instance like these, payday advances are rather beneficial; as long as you only borrow the least amount you possibly need and are able to pay back the loan on your next paycheck.
Other than the obvious financial benefit that payday advance services provide, there is also the advantage of how easy it is to acquire the loan. As mentioned, you can get the money in your pocket the same day you request the loan, which is much more convenient than applying for a loan at the bank and waiting days for approval and even longer for the money transfer.
When you apply for your first loan at a payday advance establishment, it generally only takes about ten to fifteen minutes and you normally only need a few documents with you. These documents include a valid driver’s license, a second form of identification with your social security number on it, three to five of your most recent paychecks, a current bank statement, and a blank check. The only other thing you may want to bring with you is a list of references and your work information as that will be required for the initial application.
After applying for the loan and signing all of the necessary documents, you will either receive cash or a check, depending on the company you are using. If you can find one that gives cash, I would suggest trying them first so you can avoid paying fees for cashing the check.
Disadvantages of Using Payday Advance Services
The major disadvantage associated with using these payday loan services is how easy it is to get trapped in a vicious cycle of repaying and re-loaning. That is why it is very important that you only borrow the bare minimum that you need, to ensure you're able to pay it back without still being short on cash.
If you were to borrow, say, $100, you would generally have to pay back anywhere from $110-$125, depending on the company. This is a reasonable loan and a reasonable repayment. However, a larger loan like $500 would require you to pay back up to $590. If you do not have enough money to repay that and still have money to last you until your next paycheck, you could easily find yourself re-borrowing and getting stuck in a cycle.
The worst scenario is when you have to apply for another loan at a different payday advance establishment just to be able to pay back the original loan. If you do this, you have to make sure that by your next paycheck, you have enough money to pay back both payday loans or else you may wind up going to yet another establishment to borrow even more money.
Another disadvantage that you may not like too much is that if you are unable to repay the loan on time, the company will automatically take the money out of your bank account. This could easily result in overdraft fees and bounced check fines. The good news is, you always have the option of requesting an extension on the loan as long as you notify them before the due date.
Those are the major disadvantages worth listing when it comes to using payday advance services; although I will also add that the amount of paperwork you need to sign every time you take a loan is ridiculous. It is not uncommon for you to have to sign and date up to 20 documents per visit.
After reading through all of the pros and cons of payday advance services, it is now up to you to decide if this sounds like the best solution to your problem. Just remember to only borrow the minimum amount and make sure you don't get stuck re-borrowing after every repayment.