Understanding Financial Problems

Three Reasons You Shouldn't Avoid Using A Paycheck Advance Service

You may have thought about getting an advance on your next paycheck from a payday lender, but have been hesitant to do so because of some of the criticism you have heard. The following are among the most common things you have likely heard, and why shouldn't pay attention to them.

Only poor people, with no access to banks, use this service

This is certainly not true. The typical person using this type of service is an individual with a middle-class income. In addition to the misconception of income, there often is an opinion that payday loan customers are under-banked and have no access to bank loans. Most payday lenders require that you have a checking account. Some require that you write a post-dated check for the day that the loan is due while others may simply take the payment electronically from your checking account. This type of loan is popular because it is both fast and convenient, and not because they are the only option available.

The interest rates are too high

If you look at the interest rates out of context, they do seem high, but these loans are not long-term installment loans. They are only for a couple of weeks and serve as an advance on your next paycheck. They are paid back in a single lump sum. Because of this, you need to look at the fee that is added to the money you are borrowing to determine whether the loan is worth it. Only you can determine this. The interest rate is simply the wrong way to view a payday loan.

You can get hooked on these loans

Sometimes a person will not be able to pay back the loan when it is due. For this reason, many lenders will allow a customer to roll over the loan for an extended period of time. Naturally, this incurs additional fees. But this is no different than being late on a credit card bill, a car loan or even a mortgage payment. Lenders offer to extend a loan as a service to their customers because unforeseen circumstances can happen in anyone's life.

The three criticisms of payday loans mentioned above are unfair and to a certain extent, inaccurate. Although they are technically loans, most people use them as an advance on their next paycheck. It is not as common as it used to be for employers to offer advances to their workers, so payday lenders provide a valuable service to many working people. Talk to a company like Cash Depot Inc. for more information.