The need for a sudden influx of cash can come at any time. You may be experiencing an emergency situation, or perhaps you have a possible small investment deal but need to invest immediately. Whatever the reason, the ability to acquire extra cash at a moment's notice is a valuable asset. Outside of borrowing money directly from friends and family, most loans take a great deal of time to process. However, there is one type of loan that can be paid out immediately. That loan type is the paycheck advanced, also known as a payday loan from places like Cash Depot Inc.
What is a Paycheck Advance Loan?
The paycheck advance loan is a short term micro-lending solution. You can gain access to money immediately, and will repay it when you reach your next pay period. While many companies do still offer check repayment options, most focus on direct deposit and auto-debit. Basically, you sign a contract for an immediate upfront payment. If your lending company allows for check repayments, you will usually have to write a post-dated check that they will cash the day of the agreed upon repayment. If the payments are done through direct deposit, the company will automatically debit your account for the full amount owed on the repayment date.
Are Paycheck Advance Loans a Good Idea?
Any loan can be either a good or bad idea. It is not the loan that is the issue. It is the purpose behind the loan that determines just how useful and needed the loan will be. Paycheck advances are designed to quickly grant you access to a small sum of money. However, this expedience comes at a price. Payday loans have high interest rates in comparison to other loan types. It is not uncommon for a payday loan borrower to have to pay $15 for every hundred; this means that if you borrow $500, you'll have to pay $575 on your next pay period.
The payday loan laws vary by state. Georgia, for instance, has banned payday loans altogether. Alaska, however, is an example of a state that follows the 15% rule. The maximum borrowing amount is $500. Fees are $5 for origination, plus a maximum $15 additional fee for each $100 borrowed, or 15% of the total loan amount. The decision between the fees and 15% of the total loan is decided by which would cost less overall.
Given the typically high interest rate on these loans they should only be used if you do not have access to credit cards or friends who can led you money. However, these types of loans are not bad in general if you actually have need of them. If you are experiencing an emergency, such as your vehicle suddenly needing to be repaired or you'll miss work, this sort of loan can be really useful. You would have to pay for the repairs anyway, and the loan simply grants you expedience at a small additional cost. If you are not experiencing a distinct need for money immediately, it would be best to either seek out a different loan concept or wait until payday.