Payday Loans

When Should You Get Cash Advance And When Should You Avoid It?

There is no straight answer to this question, as there are several things that you need to take into your careful consideration in order to decide whether it makes financial sense for you to get cash advance or not. But yes, there is one thing that you must always keep in mind – you should never make a decision on just on the basis of temptation. Since payday loans are designed very attractively and since they are very easy to obtain, most people feel highly tempted to borrow the same whenever they need extra cash urgently. In fact, many people are borrowing these loans even to finance their vacation, which eventually turns out to be very expensive for them. Therefore, in order to decide whether you should get a payday loan or not, you must work on a couple of factors, such as whether you can easily afford it, whether it is the only option available to you, whether there are cheaper alternatives available out there, is the lender you are borrowing from is duly licensed, whether the loan you are borrowing is charging you within the set legal limit in your state, whether your state allows payday lending and other such things.

Is Payday Lending Legal In Your State?

It all started with Georgia, which is the first state in the United States of America to ban payday lending. In the last few years, many new states have joined that league and have banned payday loans. At present, there are 16 states, where you cannot get cash advance legally. Besides that, even the District of Columbia does not allow any lender to offer payday loan programs to its resident consumers. It is very important for you to keep in mind that if you are living in one of these states, even borrowing an online payday loan will be illegal for both you and the lender in question. Though there are no punishments for you for borrowing a loan from an illegitimate lender, the lender may have to face harsh legal consequences. Therefore, the moment you come across any payday lender who is issuing payday cash advances illegally to the residents of those states where these loans are banned, you are advised to file an official complaint against them.

Is The Lender In Question Following All Legal Requirements?

If you are residing in a state, where these types of loan are still legal, you should at least do a thorough research and find out if the loan program that is being offered to you is violating the state laws. All other states, where payday loans are allowed, there are certain legal limits regarding the maximum interest that can be charged, the minimum and maximum repayment period, provisions regarding collection of debts that are not paid on time, and other such things. Before you go ahead and get cash advance, make sure you go through the payday loan laws of your state. You have got certain legal rights, which you must be well aware of. Obviously, you should avoid all those payday loan companies that are violating the state laws and charging you more than the limits allowed. Also, do not forget to check if the lender in question is duly licensed to issue such loans in your state. Some states have legally prohibited check collection companies from issuing cash advances.

Is There Any Cheaper Alternative Available?

It is no more a secret that payday loans are the most expensive financing options available out there. Therefore, you are strongly recommended to consider borrowing a cash advance only if you are sure that you have no better alternatives. Sometimes, it is better to get cash advance using your credit card instead of borrowing it from a payday lender because credit cards charge significantly much lower interest rate. Though even credit card advance is not a very great option, you can still consider it as a better choice provided you have no other alternative. Depending upon your specific situation, there can be an array of other alternatives, such as an advance from your employer, working overtime for cash, garage sale, selling an asset that you own but can live without, paying for the urgent expenses (you need extra money for) with post-dated checks or even getting a favor from one of your friends or relatives. If any of these alternatives work in your case, you should not borrow a payday cash advance because that is going to be really very expensive.

Can You Afford It?

If fail to work out a better, cheaper alternative and if you really need some extra cash to deal with a temporary financial emergency, you can consider borrowing a payday loan. But, you should still get cash advance from a payday lender only if your regular monthly income is big enough to ensure timely repayment. Since these loans are usually very expensive, many consumers who borrow it on temptation without considering the affordability factor often fail to repay the loan in time and eventually get trapped into heavy amounts of debt. Considering the very fact that a payday loan of $100 borrowed for a small period of 14 days can usually cost you somewhere around $160, you can do rest of the calculation and find out how exactly you will have to repay and how much time you have to arrange the fund needed to ensure full repayment on the scheduled due date, which is the next payday. If you borrow a payday cash advance despite knowing that you cannot afford timely repayment, you are knowingly jumping into a deep ocean of debt because the debt starts growing faster than your thoughts when you miss the deadline.

Whether you decide to get cash advance from a payday lender or not, you must do some smart budgeting to ensure you always have a decent emergency saving fund to meet such financial crisis as and when they come. The lack of financial discipline and planning and the absence of budgeting are the two major reasons why people have to face cash crunch at the first place. So, get yourself financially disciplined.


Custom Search

Tags: , , ,
Posted in Eligibility Criteria | No Comments »

Leave a Reply

You must be logged in to post a comment.