Cash Advance Loans - Payday Loan Services

Written by Serena Berger
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Cash advance loans are short term loans that are secured by your income. Typically, these are loans that you will have out for a matter of days or weeks, certainly less than two months. If you need money fast or you are uncertain that your credit history would induce a bank to give you a loan, short term cash advance loans are an option you should consider, though you need to be aware of the terms and conditions before you make that decision.

First, you need to meet a few criteria in order to qualify for most cash advance loans. Generally, you need to be able to provide proof of employment, which overlaps with the requirement to provide paycheck stubs to prove your weekly income. Most reputable financial institutions which offer cash advances on paychecks require that you've had your job for a certain amount of time, though that can be as short as a couple of months.

There may be a minimum salary requirement in order to qualify for the loan; typically that would be a net income of around $1,000 per month. You also need to have a valid checking or savings account that's been open for a few months. Direct deposit is required, so you will have to offer an account number to which your loan can be deposited, and from which the payment can be automatically withdrawn after your paycheck comes in.

Security Issues Pertaining to Cash Advance Loans

These might seem like a lot of requirements, but they're there to protect you as much as they are to benefit the institution giving you the loan. By insuring that you are employed and guaranteeing that they will be paid back, the bank or lender can afford to charge lower interest rates, given a generally limited cause to fear clients defaulting on their payments. You gain peace of mind because the loans travel over Federal Reserve Wire System wires, which means you have the protection of the federal government--no one is going to steal your money, and the lender cannot take more from your account than you authorize to be paid back.

There are any number of reasons why people would want cash advance loans. One of the best things about them is that no one is going to ask you what you need your loan for. If you've run into a problem paying some of your bills on time, you can get a loan, pay your bills, keep your electricity, phone, or heat running, and then pay the loan back when you get your paycheck. Whether it's more a matter of convenience or pride, being able to get cash to pay bills that need to be paid is important.

Interest and Fees Associated with Cash Advance Loans

You should be aware, however, that the fees and interest rates for cash advance loans are high enough that you probably don't want to get one if you have a better legal option. The A.P.R. (Annual Percentage Rate) is going to be astronomical--we're talking potentially over 1,000 percent! Of course, with a short term loan, you're never going to be paying interest for a full year, which means you would never ultimately pay $1,000 on $1, but just for a couple of weeks, that could still be about $20 in interest per $1 you borrow, per week.

Some lenders will charge a fixed fee based on the amount you borrow and the term for which you borrow it. This fee isn't going to be cheap, either. For example, if you want to borrow $200 for seven days, you might have to pay $50. The institution is still calculating this fee internally using an A.P.R., but they present it to you as a fixed fee instead of scaring you off with the A.P.R. percentage. With a flat fee, the A.P.R is effectively lower if you have a longer term loan, but the fee is still the same percentage of your paycheck, so be careful!

With those cautions in mind, short term cash advance loans are still the best option for people in a variety of situations. If you have a poor credit rating, you can actually help to build your credit rating by taking out a loan like this, so in the future you will be able to get a loan at a lower interest rate from a bank. And the bottom line is, if you need the money, there is no faster legal way to get it from a reputable institution. Within hours you can have an advance on several hundred dollars, up to $1,000. You don't have to take personal treasures to a pawn shop and you don't have to complicate your personal relationships by asking your loved ones for money.

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