Do Research Before Your First Cash Advance

Getting your first cash advance can make you a little uneasy. You do not know what to expect and the uncertainty can make you a bit scared. The anticipation of getting the money you need quickly seems enticing. This promise of "easy money" gets a lot of people to agree to their first cash advance. Before you agree to anything, you need to do your homework and make sure that the arrangement is in your best interest.

How They Work

To get a cash advance, the process is quite simple. The application process usually takes less than 20 minutes. It is designed to get you in and out before you reconsider doing it. They do not check your credit or scrutinize on the details. They will typically approve you very fast. You write the cash advance company a post-dated check for the amount you borrow plus their fees. They give you the money that you need and keep the check until the date specified. This money will typically be deposited in your bank account within 24 hours. 

Costs

While a cash advance can be enticing, the costs associated with them are high. When you need a cash advance, you are usually desperate for any money that you can get your hands on. Therefore, they know that they can charge outrageous fees and get away with them. While the fees might not seem like much at the time, when you figure out the percentage that you are paying, it is astronomical. Let's say that you got a $100 cash advance. A typical fee for that loan would be $15-$20 and you have to pay it back in two weeks. While it does not sound like much with small numbers, when you calculate it out, you are paying over 300% interest on the money that you borrowed. There is no other industry in the world that can charge that much interest and get away with it. 

Another way that cash advance companies make money is when you need an extension. For example, you take out a cash advance and then when you get your paycheck, you cannot afford to repay the loan. You call the cash advance merchant and tell them that you need more time. They will be happy to give you an extension, but the fees will be even higher than the original loan fees were. 

Other Possibilities

With the unbelievable fees that are associated with cash advances, you should most likely explore your options before you agree to one. There are other ways to get the money you need in an emergency. You could borrow money from a family member or friend for a much lower interest rate. You could sell something lying around the house at a pawn shop. You could even hold a garage sale to get the short term cash that you need. While cash advances work for some people, do not think that they are your only option in an emergency. 

 

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