What Is a Check Advance Loan and Should You Get One?
Is there a bill or a payment that you need to settle right away? And is your payday not for another few weeks?
Check advances can be a quick fix to that problem.
Have you been struggling to make ends meet and can’t rely on your main source of income as you’re not getting paid till next week? Applying for a fast and easy loan could be your saving grace.
A lot of payday lenders have worked with different companies to give the necessary help to problems that most employees come across. If you need a somewhat large amount of money by the next day, or even in a few hours, other loans will take too long. Being uncomplicated, check advances allow you to get an advance on your pay in only a few minutes.
If you’re not too familiar with them, here’s a guide on what check advances are.
How Do Check Advances work?
Check advances or payday loans are short-term loans based on the borrowers next paycheck. The borrower writes for an advance to receive a part of their income in cash, with an interest rate. Although, you can also apply for a check advance and receive cash through a line of credit.
The check advances do not require any collateral before giving the cash, making it an unsecured loan. These loans serve as a fast solution to any financial problems, especially with short notice. This isn’t without a high-interest rate, continually rising after the scheduled due date.
The loan will be dependent on the borrower’s income, ranging from $100 to $1,000. You will have to provide your pay stub to the lender when applying for the loan. The standard loan term is two weeks and the interest will slowly increase after every missed payment.
Requirements for Getting the Loan
Lenders do not carry out any deep credit check or investigate on the borrower’s ability to pay back the loan. The only thing you need is your identification, a paystub from your secure income source, and a bank account. The loan is often approved a few minutes after the borrower fills out the registration form and receives the cash right away.
Some lenders even offer services for online payday loans. You can get guaranteed approval loans for poor credit here.
Protection for Borrowers
Most of these loans happen from payday stores that offer check advance loans and other financial services. There are many regulations on the cap on interest rates in thirty-two states in the US. Check the Payday Lending Legislation regulations in your state here.
Payday lenders are not allowed to charge above the 36% annual interest rate. They also can’t secure unpaid loans by debit authorization, taking checks, taking the borrower’s car title.
Lenders also need to restrict loans to people who already have a current short-term loan. As well as disclosing the Principal Payoff Option and not misleading people by adding discretionary clauses in the borrower’s contract.
Some payday loans place restrictions for active military and their dependents as the MLA (Military Lending Act) covers them. This gives protection to the military from payday loans. Together with other high-cost loans that could affect their financial stability.
Lenders are also required to inform the three major credit reposting bureaus. To report all payments and if any are late.
Check Advance Interests
Along with the borrowed fee comes the interest rate. In most two-week loans, the interest rate will typically be from 390% in finance charges. Being a good source of fast loans, the interest rate is in line with its cost. In most states, every $100 borrowed has a finance charge of $15 to $20.
If the borrower fails to give the full payment on the due date, the interest rate can reach up to 500%. You can choose to “Roll Over” your loan if you can’t pay for it after the two weeks. This means that you can move the due date of the loan to when you can pay. Although, with the “Roll Over”, there is an increase with the finance charges.
When calculating your interest rate, keep in mind the average finance charges. Of course, this varies from lender to lender and even state to state. So, make sure you know everything about the interest you agree on with your lender.
For example, if you borrow $500 with a $15 per $100 finance charge, then the total you will have to pay is $575.
Repaying Your Loan
When you apply for a loan, you provide a post-dated check to the lender which has the borrowed fee plus finance charges.
After the two weeks have passed, you’re encouraged to return to the lender’s store to get back the check. If you can’t pay by the due date, this gives you a chance to either “Roll Over” the loan or re-apply for it.
If you fail to pay for the loan after the expiration, the lender will cash the check given as soon as possible. If you’ve taken a loan from an online payday lender then you will have to provide an ACH (Automated Clearing House) authorization.
This will allow the lender to get repaid electronically so be sure on the amount previously agreed on to avoid confusion when they withdraw.
Should You Get a Check Advance?
If money’s tight and you need to come up with some in a short amount of time, yes. Check advances, although having high-interest rates, give you an easy way out. Being able to apply for a loan and receive the cash on the spot.
That can be a lifesaver.
We hope that you learned a lot about check advances or payday loans from this article. Hopefully, we were able to help you in deciding about applying for a loan. If you want to read more articles like this, feel free to visit the rest of our site!