If you are considering a Quick cash loan (payday loan, fast cash loan, payday advance etc...) to get you through a tough financial time, you may be making a smart decision. Despite the ridiculously high APR that loan providers charge, a payday loan is many times a lower cost option than paying fees stemming from bounced checks, credit card late fees, re-connect fees etc...
Here are 3 myths that are commonly and erroneously associated with a payday advance loan.
MYTH: Quick Cash Loan providers charge outrageous rates
TRUTH: You've got to compare. A payday loan is typically cheaper than other customer alternatives.
Here's a scenario: Did you forget you didn't have any cash in your checking account but bought stuff anyway with your debit card? Maybe you did that 4 times in one day.
It's amazing how we can lose track of our finances, but we all do it..
Guess what...
Each occurrence just cost you $35 in NSF fees from your bank. Those 4 withdrawals of $10 just cost you $140 dollars in fees! Ouch! The cost of borrowing $100 from a payday cash loan provider is $15 - $20 per $100. The APR on this transaction is 391%, which seems sky high but compared to the overdraft fees at your bank it makes good sense.
The remedy here is if you know you're going to be short of cash but need to use checks or debit card, weigh the costs. It may be better to set up a fast cash account and use it only when you know you'll be potentially incurring late fees.
MYTH: Quick cash loans always create a spiral of debt for the customer
TRUTH:Most users are responsible borrowers and have no trouble managing the short payback period.
These loans are short term solutions and most borrowers realize the danger of being over extended. About 60% are one time users - meaning they don't renew the loan or have to extend the payback period.
Studies have also revealed that:
66% of payday loan users utilize the service to cover only unexpected expenses
34% use payday advance loans for a planned expense
70% of fast cash loan users only use the service 1 time per month.
MYTH: Emergency loans prey on unsuspecting customers
TRUTH: There are solid laws in place to protect customers from being taken advantage of.
The overwhelming popularity of these loans as a discreet and dignified way to solve temporary cash flow problems speaks for itself.
70% utilize fast cash loans because of the convenience (fast, easiest...)
96% are fully aware of the charges they will incur. Most state they were quoted the fee as an APR. Most believe that quick cash loans are useful ( 92%) and only about 12% state they were dissatisfied with the service.
Also, 33 states and D.C. provide balanced, responsible regulation of payday advance companies.
Summary
Why not consider a quick cash loan when you know you are going to be short on cash and will face fines or fees? As a temporary solution you may save a lot of money despite the high APR. It's easy to find a reputable quick payday loan provider (see links below) and set up and approval takes only minutes.
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