Payday Loans

Everything You Want To Know About Cash Advance Checks

Cash advance checks are small amount of short-term payday loans, where lenders allow you to borrow a smaller sum of money against a post-dated check of a larger amount. The margin between the two is the profit for the lender; they justify doing this by claiming this margin actually includes interest charges as well as other fees, such as loan process fee, approval fees and others. Though these types of cash advances are very popular, it does not mean that they make the best financial option for those who need quick money to meet some urgent financial requirements. Despite the aggressive advertisements that lenders do in support of these check payday loans and despite the lucrative features they claim these loans offer to the borrowers, it is very important for you to understand that these loans are extremely costly and risky. Following is a brief overview on some of the major aspects associated with the same.

How Exactly Does It Work?

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Cash advance checks allow consumers to borrow money just by issuing a post-dated check even though they currently do not have sufficient fund in their bank account to honor that check. Lenders still agree to lend money believing that when the due date comes and when the check will be sent to the borrower’s bank account for collection, there will be sufficient fund out there and that they will be able to get their money back. A certain amount of lending fee is charged on these checks and the fee varies from one payday lender to another. It means if you are issuing a check of $600, you will get a lesser amount of cash, after deducting the lending fees, which can be somewhere around $50 to $80 (or even more). In short, you have to pay a large sum

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of money in terms of lending fees to borrow a loan using this option. The lenders send the check for collection on the due date and collect their money.

What Happens When The Check Is Bounced?

When you borrow money using cash advance checks and the check issued by you gets bounced on the due date, you will face an array of harsh consequences. To start with, both your bank as well as the payday loan company will charge check bouncing fee, which can prove to be very costly for you. Besides these penalty charges, you will also have to pay interested for every single day of delay you make in repayment. The interest rates charged by cash advance lenders usually range from 200% per annum to 800% per annum. In order to avoid the check bouncing fee, you get an option to request the lender for extension in the repayment period, which lenders usually accept. Such extensions are termed as renewal or rollover and are usually approved for a minimum one month. Though you can avoid the check bouncing fee by availing the option for rollovers, it is very important for you to keep in mind that you will still have to pay interest at an extremely high rate for the extended period of time. If you do the calculations, you can easily realize that just a single rollover or renewal can make your overall outstanding debt balance just double or triple or even more of the actual principal amount of money you had initially borrowed.

Borrowing Check Cash Advance On A Regular Basis

A vast majority of borrowers end up borrowing cash advance checks on a regular basis; they usually feel tempted to borrow it just because it gives them instant cash, which sounds like a wonderful temporary solution. But, these borrowers eventually end up getting trapped into a permanent debt problem. Such practices create a vicious cycle of payday debt. Therefore, you are strongly recommended to borrow these types of payday loans only if there is no better alternative available and only if you are sure that you can practically afford to repay it in a timely manner.

The attractive features that are often advertised about cash advance checks include fast approval of loan, easy application process, no or every little paperwork, quick access to the borrowed money, no credit checking, no faxing of documents and other things like that. But, if you consider the risk factors (as explained above) associated with these loans, you will never find these features attractive anymore.


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