The Cost of a Cash Advance Loan

Cash advance loans are quite expensive and should be used for extreme situations only. In addition, when you take a cash advance loan, make certain that you do have the ability to repay this loan on your next payday. If your advance is not paid back in full on the date initially determined you will be charged extra fees.

Typical Costs of a Cash Advance Payday Loan
Notice most online cash advance loan services don't exactly advertise their rates? In fact, in many of their FAQ's answer the "how much does it cost question" with answers like, "less than bouncing a check" or "less than having your service shut off". While these answers may be correct, you are still entitled to know how much the service costs.

On average, the cost for an online cash advance loan is $25 per $100 loaned, which is to be paid back in full with the loan payment on your next payday. So, if you borrow $200 today and have agreed to pay it back 2 weeks from now on payday, you will need to $250 when you pay it back.

We have seen some cash advance services who charge as little as $20 per $100 loaned, and some that charge as much as $30 per $100 loaned.

If You Cannot Pay It All Back On Your Next Payday
Being unable to repay your cash advance loan in full on your next payday as planned is where cash advances can really get dangerous, and it's why we always recommend making absolute certain you can repay the loan in full. Most cash advance services will gladly give extensions on your loan generally charging you just the interest fee on the day it's supposed to be repaid, then adding a new set of fees and interest. Look at the example below to see how costly a cash advance loan can become to a borrower who is unable to repay:

Day 1 - Borrower borrows $200 and agrees to pay back $250 in 2 weeks on his next payday.

Day 15 - Borrow gets paid, but needs a portion of his paycheck to cover expenses, and can only repay the minimum, but agrees to repay the rest on his next payday. Borrower pays $50 and extends his loan until the next payday. Sometimes the lender will just add the new $25 per $100 loaned fee, but many will tack on an additional $15 fee for the extension. Borrower has paid $50 towards his original $250 debt, but now owes $265.

Day 30 - Borrow gets paid again but like before, must use some of his paycheck for other bills and once again must get an extension on his cash advance loan. Gladly, the lender takes the minimum payment of now $65 and extends the initial $200, plus fees and interest for yet another 2 weeks.

In just 1 month the cash advance lender has made $115 from his original $200 loan. This cash advance has already cost the borrower over 1/2 of what was loaned in the first place and the borrower has not even made a dent in the actual amount owed.

Cash Advances and Payday Loans certainly serve a great need to millions of people in the US today, but they are available to most anyone, regardless of need and should be used responsibly.

Bad Credit and Getting Into Debt?
If you have bad credit and are in need of a high risk personal loan, you may wish to check out some of these lenders for a longer term, lower interest rate solution.

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