The Stiff Price of Getting a Cash Advance Online
When it comes to requesting a cash advance online, the process seems simple enough. Most lenders require interested borrowers to complete a basic application. If the consumer meets the lender’s criteria, then the money will likely be wired into his or her checking account on the same or next business day. Getting a cash advance is generally an effortless endeavor. Most lenders who offer them even approve these types of loans for those with poor or no credit. However, the simplicity of online cash makes it easier for people to avoid setting up their own emergency fund lifeline.
Those who don’t have a savings account for unexpected expenses usually borrow funds from a financial institution. To borrow money from a bank, a consumer must have a steady income, good credit and a manageable amount of debt. While many people enjoy these life circumstances and have no trouble borrowing money when they need it, there is another group of people who aren’t as fortunate. This group makes less, tends to have poor credit and may have more debt than they can comfortably handle. They are also more likely to need a cash advance and wind up paying the stiff financial and emotional price of getting one.
How Much Does a Cash Advance Online Cost?
The cost for a cash advance varies based on a borrower’s state. The Federal Trade Commission1 reports that in most cases, a cash advance lender will charge a percentage of the amount borrowed, so if a consumer borrowers $100, then the lender may charge something like 25 percent for the amount. This would come to a fee of $25. Some lenders may also charge interest until the loan is repaid. In addition, if the borrower is late with his or her payment, then the lender will likely add a late payment charge to the principal balance.
What Situations Necessitate a Cash Advance?
If an individual has claimed bankruptcy, then a cash advance may be the only way for him or her to gain access to emergency cash. Repaying the cash advance in full and on time can help the person start to rebuild his or her credit score. ZeroMillion2 reports that the key to avoiding additional debt trouble is to use cash advances for financial emergencies only.
While expensive, cash advance online loans can save some borrowers money in the long run. For instance, mortgage lenders charge high late fees. In fact, these fees are frequently around $85, so a short-term cash advance loan is often more affordable than paying a mortgage payment late. Also, if a person’s credit history is on the line, it may be more cost-effective to take the hit from the cash advance loan fees than it is for a person to sacrifice his or her credit score. When a person’s credit history loses a few points, he or she could suffer lasting effects for years. Borrowing money may suddenly become a lot more expensive.
More than a One-Time Thing
A major problem with short-term loans is that they’re not usually a one-time thing. A study completed by the Consumer Financial Protection Bureau found that most short-term loan customers request three or more loans in a year. In fact, more borrowers take out 20 or more short-term loans than they do one or two. This is when the price of cash advance loans becomes especially stiff. When a loan is rolled into a new one, lenders add fees that often wind up totaling a higher amount than what was originally borrowed.
The Unforeseen Financial Costs of Being Human
Unforeseen financial emergencies are a part of life. In today’s economy, too many people are unprepared when these incidents happen, which means that they must turn to lenders for help. While taking out a cash advance online is easy and convenient, it also comes with a stiff price. Cash advance fees escalate quickly, and when people become mired in debt, it brings stress to their emotions and bank accounts. Most short-term loans come with a high price, and they should only be used when there is no other option. To read more about cash advances and their costs, visit the Personal Money Store.