Payday Check Advance

A payday check advance is like a rich uncle who is there to supply any and all financial needs with dough that is green and quite spendable once out of the lender's oven. For many Americans who live paycheck to paycheck, the payday check advance lending agreement is a very convenient way to get out of sudden financial emergencies. Whether the need is for a new rebuilt transmission for the car or the washer, dental work for a child, a new furnace or a trip to the emergency with that requires a large co pay, these lending instruments can be fairly painless to secure as long as someone has a job and an active checking account. But this payday lending agreement has some painful and in some cases deadly financial barbs attached at the other end of the payback period. Understanding how these loans work is an import factor in not allowing them to gain a permanent foothold in a person's financial life.

In order to understand the danger of such loans, it is helpful to realize that that over seventy percent of Americans are already living paycheck to paycheck. This sobering fact means that the majority of Americans has no viable savings and is unprepared for the common emergencies that seemingly arise almost every month. Oftentimes parents or family or friends are able to help, sometimes even churches can rise to emergency situations, usually for members that they know. If the emergency arises in a homeowner's family, that owner may be fortunate to have enough equity in the home to secure a home equity loan for these unanticipated circumstances. But for many, especially those who make less than a livable wage, just a bill for three or four hundred dollars can be a money nightmare. And those who provide a payday check advance to these meager wage earners may be unwillingly participating in further debt enslavement for these borrowers.

There are no questions asked about the use of the borrowed money which can lead to frivolous or even self destructive use of a e fourteen day payday check advance loan. And since there are also no credit checks or investigations into debt to income ratios, those with already poor track records in handling borrowed money are the most likely to use such a lending agreement. While the proponents of such lending practices point out that they are perhaps the only place that a low income person can turn for emergency funding with a modicum of dignity, the reality remains that once the payback date is missed, or the loan must be extended, the borrower can be caught in an awful undercurrent of ever increasing interest and obligation.

If a local lending company is used and not an online lender, a payday check advance lending agreement happens like this typical scenario: first, the borrower comes into the office and must show some sort of picture ID issued by a government authority. A piece of first class mail from a business or a utility with the borrower's names and address must be shown. Thirdly, proof of a working checking account must be available as well as a paystub from the borrower's place of employment. This last requirement may be in the form of a check stub and the borrower will be asked if he is paid weekly, bi-weekly or monthly. The borrower then signs a personal check made out to the loan company for the amount of the loan plus the interest and fees associated with the payday check advance agreement. The check is post dated for the date of the next payday and on that date the lender cashes the check and the agreement is over.

The problem with the payday check advance culture is the high interest rates that borrowers must repay very quickly. So exorbitant are some of the rates that many states have regulated many of them out of business. Annual percentage rates still allowed in some states are over one thousand percent. These would be applicable in the case that a loan would go into default and not be repaid after a year's time. In some states, these high interest loans are not allowed to be extended beyond a fourteen day period. But for the loans that are extended when a borrower cannot repay, new interest and fees are brought to the agreement increasing week by week in large doses the debt the borrower will owe.

For the one who can afford a hundred or two hundred dollar loan and there is enough money in the paycheck to pay back the loan quickly, the payday check advance lending agreement is a handy alternative to consider. In some states, a hundred dollar payday advance for two weeks will only cost about thirty dollars. Two hundred dollars will cost about sixty dollars plus the principle in the payback check. But for the desperate man or woman that has to think about food on the table or pay the heating bill, this kind of lending agreement can seem like an answer to prayer until the fourteenth day arrives. For the lender, it's just business, but for the debtor it's another crisis that has to be faced.

For more information: http://www.1hourcashking.com