An important factor that facilitates the advancement and development of various businesses and innovation is the continuous or constant flow of cash. This has forced banks and other money lending cooperations and companies to find different and new ways to help people have access to money. One of the main ways being used today is the payday cash advances which is also known as payday loans.
So how does payday cash advance work?
Payday cash advance is money loaned in a short term basis based on a person’s next salary payment or personal check. An individual borrows money equivalent or slightly more than their regular paycheck and they guarantee their future paycheck to pay that loan. The payday cash advance is better for people who are on the payroll or have a steady paycheck. This may look beneficial in the short term but in the long term, it may affect the lender who will be entering into a vicious debt cycle for one cannot pay them off gradually like most loans.
They are different from other loans given in the bank because they have no installment, they are given in smaller amounts and in a short term basis of like 2 weeks and they actually have a higher interest rate.
Payday cash advance is advantageous because:
- It helps you during an emergency. For instance, if the electricity bill of your industry bounces and the electrical company wants to turn off the lights, this loan helps you escape an embarrassing situation.
- Payday cash is easier to apply for as compared to getting a traditional loan, which usually has many conditions and requirements attached to it. Choosing to get a traditional loan may force you to stop any work assignments.
- Money transference through payday loans is faster. You can get your loan in one hour thus helping you continue with your work.
- The terms of payment are flexible. This component makes payment very comfortable and convenient for entrepreneurs, for they can clear the loan once, by using their future paycheck.
- It helps cater for unexpected expenses such as fixing a broken down machine or even late bills.
- Payday loans are very convenient because the entire transaction can happen online without you going personally to the bank, this enables you to save on time.
- Payday loans do not have the same limitations on bad credit as most loans have. This means that having a bad loan may not automatically rule you out on the acquisition of the loan.
As most services payday advance has its own disadvantages:
- It is more expensive than other loans, this is largely because of the additional finance charge paid with the loan.
- 2.Some companies may deceive the lenders on their terms and conditions. Most companies feed on the lender’s desperation.
It is evident that payday cash advances have its advantages and disadvantages, it is highly recommended that before you embark on it, understand the risks and costs attached to it and know and realize the right time to actually use it.