Cash Advance Workings

Cash advances work by providing you, the borrower, with a temporary influx of cash in the form of a loan in exchange for a guarantee of payment. This guarantee usually takes the form of a check given to the lender that they can cash from your account at the appointed time or, in some cases it will be in the form of collateral that they hold until you have repaid the loan and the fees associated with it.

Will They Check my Credit?

Some Urban Cash Advance centers will, and they will make their intention clear to you before you sign any paperwork authorizing the credit check. Many cash advance centers do not require a credit check, however and will settle for your social security number only as a way of enforcing collections efforts against you should you fail to repay the loan in a timely manner. Conversely, some cash advance centers may report favorably to your credit if you use their services wisely and pay them back quickly.

What if I Don't Pay Them Back On Time?

In most cases, if you are unable to pay back an advance at the agreed upon time, they will simply impose another fee while waiting until an extended time to be repaid for the loan. This can be extremely expensive and equal an annual percentage rate on your loan in the thousands. For example, if you agree to a payday loan of $100 for two weeks for a $15 fee, you were essentially paying $7.50 per week for that loan or 7.5% weekly. That equals an annual percentage rate of 390%. If you fail to pay the loan at the end of the two weeks you may be charged another $15.00 for a two week extension plus an additional $15.00 penalty. This bumps the equivalent APR (annual percentage rate) for the loan up substantially and could end up costing you much more than you were initially willing to pay for a $100 loan.

If after two or three extensions you are still unable to pay the loan, the cash advance center may begin collections efforts against you up to and including initiating court proceedings to attempt to recover the loan the fees and then, the court costs as well.

Who is Eligible for a Cash Advance Loan?

Laws vary from state to state on who can get a loan and for how much. The U.S. Government recently passed very tight restrictions on lending to active duty military members, and as such, some cash advance lenders will not lend money to men and women in the service at all.

Typically the requirements for getting a loan are:

• Verifiable income of at least $1,000/month
• Checking account in good standing (no recent overdrafts or not currently negative
• No currently outstanding cash advances from the lender or other lenders
• You must be a citizen of the country in which you apply