A cash loan, also known as a payday advance, is a type of unsecured loan. The lender will give a small amount of money to the borrower. The borrower will then write a check to the lender for the money and the debt fees. The amount of the check will automatically be deducted from the person’s next salary.
Who gets a payday advance?
A payday advance deals with small amounts of money – certainly much less than the borrower’s monthly income. In most countries, this type of lending is regulated with a borrowing limit. According to statistics, most borrowers have incomes at $15,000 – $25,000 a year.
There’s a big demand for payday advances in Australia. Nearly 3 in 4 people get a payday advance at least once a year. 1.1 million people borrow money annually. Most payday advance borrowers get the service again. In fact, statistics show that people who get this type of loan come back as much as 10 times a year.
They are a popular choice for people who run short on money before their next salaries. 53% of payday advances are used for living expenses. Groceries are high on the list. Those who are employed, single renters aged 25 to 30 and living off a low income are more likely to get a payday advance. The same is true for the disabled, separated and divorced.
Consider the fees
The maximum fee for cash loans is 24%. Most establishments will charge 20% for the initial lending. Should you choose to split those payments throughout the year, the lender will charge 4%. This is a standard for most lending establishments. Whilst these are standard interest rates, keep in mind that the establishment can add charges to your account if you miss a payment.
Most establishments will allow a minimum of 16 days for borrowers to pay their advance. They will adjust accordingly depending on the borrower’s needs. If you’re planning to get an advance, make sure that you read the contract thoroughly – including the fine print. Keep in mind that if you have bad credit, the interest rate on your cash loan will be higher.