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Cash Advance Loans: Loan Sharks In
Disguise?
You have seen them on the corner and in the poorer
parts of town with names like "Quick Cash", "Quick
Loan", "Payday Loans", "Car Title Loans". They are
starting to sprout up all over the country and will
soon rival Starbucks for\line sheer number of
locations. They are the new trend in predatory
lending practices but still manage to fly under the
radar of regulation in most states. They don' t
charge interest, they charge a "fee". But it sounds
like the ultimate in convenience. Need some quick
cash - stop by and in just five minutes you can\line
be out the door with $100, $500 even $1000 dollars.
But what is the true cost of this "convenience"? How
It Works. A cash advance or payday/paycheck loan is
usually secured by a personal check. Some companies
want your bank account or credit card information in
addition to or instead of a check. You
write a check to be cashed or agree to have an
amount withdrawn from your bank account
sometime in the future; usually 14 days (the
standard payroll period). After completing the
agreement/contract you are given an\line amount that
is less than what you have agreed to pay. The
difference is the "fee" for the loan service. And
you have got your cash! Why It Works Why
is the company willing to loan you money like
this? Simple, because loaning out money for these
"fees" really amounts to a huge profit at your
expense. For example, say you borrow $200 and
the lender charges a "fee" $15 for each $100.
Within 14 days you will have to\line pay $230 for
borrowing $200. Now if the $200 keeps you from
having to pay a $100 late fee or penalty on
something it is probably worth it. But if you
just want the money today, you are paying a
high price. You are paying 15% interest for a
14 day loan. That amounts to 3785% compounded
interest yearly! No wonder lenders are happy
to loan you this money. If they loan you $100
and you pay them back with an extra $15 in two weeks
and they loan out the $100 again along with the $15
extra you paid, and they keep doing this for one
year, they will turn their $100 into $3785 by
the end of the year! Maybe you should be
loaning your money to them rather than borrowing
from them. What To Watch Out For* Early repayment
fees. Pay off your loan early and they\line sock you
with another fee.* Late repayment fees. You may have
to pay the entire fee again if you miss the payment
date. * "Membership" fees. Some companies charge you
to become their customer along with charging you as
their customer.* Giving lenders access to directly
debit your bank account. Just hand them your
wallet, it's quicker.* Fine print (as in all
contracts). Know what you are\line signing or don't
sign it.* Bounced check or debit fees. Make sure you
have money in your bank account or you get to
pay your bank a fee as well.* "Collateral"
requirements such as a car title. Miss your
payment and you may be missing your car -
permanently. There Is A Better Way The
root problem here could be that you are getting\line
strangled by your debt payments. Credit cards,
store\line accounts, installment payments and such
can eat up your income quickly. It may be time
to visit a non-profit credit counseling service or
create a debt reduction plan for yourself.
Or it could be that you are just spending more than
you make. You may need to spend a few minutes
each week and write down your expenses. Then
categorize and total them to see where your
money is going. Then record your income for
the same time period and make sure that you
are not spending more than you make. Sure,
everyone gets behind occasionally. But you need\line
enough room in your budget (this means spending less
than\line what you make) to accommodate the "budget
busters" and surprise expenses that may come
up. It may mean\line cutting back on cable, magazine
subscriptions or eating out. But last time I
checked, McDonalds did not charge\line a $15 "fee"
for making your food.
This article is the property of
www.bestcashloansonline.com, which has been
offering Payday Loan services since 2002. To find
out more visit
www.bestcashloansonline.com
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