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Payday Loans - How do they compare to standard loans?

By: Andrew Evans

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Payday advances are short term loans with the principal value between $100 to $500 and normally range over a time period of two weeks.The rate of interest can be above 500% of the normal market rate. The most crucial fact regarding cash advances is that any person with or without a positive credit rating can make an application for a cash advance and can even get approved within 24hrs of application. This means that cash advances a good solution for anyone who has been rejected through normal lending institutions like banks.

Payday advances are very different from the loan that we get from a standard bank or another lending institutions. A bank does some background checks on the borrower and examines if he has any loan default or has some negative remarks on their credit rating. If they found you with some misleading history then you are sure to be turned away for your loan application. Additionally, a bank also demands you to fill out massive paper work and other official formalities before you can be provided with your required amount. Even when you are approved for your loan, you cannot expect your money to get to your bank account in less then 5-6 days from the application.

However, a cash advance will be approved without any credit check and with a very small amount of paper work. Besides that, the borrower can get the money into his bank account within 24hrs of application. These points make cash advances an exciting solution for a customer seeking a short term loan.

You should keep in mind that a cash advance has a large interest rate; anywhere between 400-600% while a traditional loan has an interest rate of around 40-60% in general. Though a cash advance might seem an attractive solution, it is always advised to avoid cash advances and have an emergency fund to solve your financial difficulty as non payment can result in a vicious circle of debt.

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The writer operates a number of finance related sites. For more information and advice on no fax payday loans or faxless payday loans as they are often called, click on the above links.

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Payday Loans - How do they compare to standard loans?

Payday Loans - How do they compare to standard loans?

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