The Price of an Overnight Cash Advance

Overnight cash advances provide immediate liquidity while you wait for your paycheck to be delivered. Most cash advance lenders propose these loans as the magic fix to financial emergencies. However, due to hidden costs, most borrowers will end up in worse shape after taking a cash advance.

High Interest Rates

The interest rates on cash advances are the highest in the business. These lenders work almost exclusively with high risk borrowers who do not qualify for traditional loans. As such, they have very little competition for the lending opportunities. Without competition, they can charge huge fees and still get customers.

High Late Payment Fees

The fees for missing a payment on a cash advance can be as large as the loan itself. This is particularly problematic because cash advances are usually due to be repaid in one, lump sum. Payment plans could ease the burden for most borrowers. When the sum is so large, though, the borrower may simply not be able to come up with the funds in time. This is what the lender wants. Then, the lender can assess the late payment fees and get the borrower to take out another loan to pay off the first. This debt cycle guarantees consistent profits for the lender.

 

 

 

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