The Real Cost of Quick Cash Loans

When we talk about cash advances, we often relate them as “ambiguous.” With many things kept hidden and obscure, including the calculations, we can hardly know what the real cost of cash advances is. Those are some reasons why many people stumbled deep in debts due to cash advances (and unfortunately, those causes cash advances to get all the blame for getting people in debt!)

The reality is, you, the debtor, are the one responsible to know what you are doing in you personal finance decision making, e.g. to take or not to take a payday loan, etc. Here are some pointers to get you started.

One thing for sure: If you apply for a payday loan, what you actually pay is usually the financing fee, rather than the interest. The APR is utilized to compare the annual cost of the payday loans, despite the fact that payday loans are usually repaid in 17 days or less.

Financing Fees

Like what I mentioned above, most cash advances charge finance fees rather than the interest. The cash advance companies are doing just that to exploit the loopholes in some US state law. Finance fees are usually charged every 2 weeks, although this could vary from one company to another.

For a $100 cash advance, you are expected to pay about $15 in finance fees. You need to compare the rates to get you the best. Fortunately, online lenders show their rates or APR, so you can Google for the lender in minutes.

With quick cash loans, failing to repay your loans on due date will let your loans to be rolled over. You need to be extra-careful with such option – You could end up owing more finance fees than the principal itself.

How APR works

APR (Annual Percentage Rate) is the cost of your loan in yearly rate. APR is related to cash advances despite the fact that cash advances are intended to be short term. Online, you will see cash advance companies list the APR on their site. For those who don’t, you can simply request for their APR before you apply.

Compare costs to make the right decision

In deciding whether you should getting a cash advance or not, you need to compare any costs related with your decision making. E.g. will you pay more in late fees than in cash advance payments? Will going to the Doctor today with payday loan costs less than waiting for things get worse later? Should you take any loans, at all?

The rule of thumb: If the finance fee is smaller than other costs related, then taking a payday loan or cash advance can actually save you money in the long run. Bottom line: You HAVE to understand how to crunch the numbers; how to compare costs to decide whether taking a quick loan is a viable option.

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