A lot of people are strapped for cash these days. Try as they might, the old paycheck just doesn't stretch as far as it used to. In many cases, family members have lost their jobs, their unemployment insurance has run out, and there just aren't any jobs to be had. Recessions are tough on most of the population who have been faithfully paying off their mortgages, car payments, and other bills for many years now. Those balloon house payments that looked so good five years ago are suddenly looming their ugly heads and demanding payment. Consumers are stressed and looking for options to fill their financial gaps. That's one of the reasons that cash advance websites have become so prevalent and popular. Unfortunately, the consequences of taking out one of these short-term loans can be devastating if not done wisely.
The premise of these loans is that you borrow the money today and then pay it back, plus a fee, when your next paycheck arrives. Let's say you borrowed $250. You think that you'll easily be able to cover the loan when you next get paid. Of course, you'll also have to pay up to $50 in lending fees which makes the amount you need to cough up come payday around $300. Will you really have an extra $300 over and above what you need to live on in your next paycheck? For most people, the answer is no. Of course, most of these companies will gladly allow you to extend your payments over time, like for the next three or four weeks. Unfortunately, every paycheck will probably already have been spoken for, and the extra just won't be there to repay the loan.
If the $50 handling fee was only a one-time proposition, it wouldn't be so bad. Sadly, this extra $50 is going to be applied every single week you maintain an outstanding balance. Therefore, in only a month's time, you could end up owing $450 instead of the original $250 which will be even more impossible for your to pay off. This is a trap that no one wants to get themselves into, but it can happen easily with a cash advance loan. These loans are too easy to get, and people just aren't making wise decisions when it comes to borrowing.
There is a place in our society for cash advance loans, but only if the borrower has the income to repay the loan immediately. Otherwise, these loans become just like the exorbitant credit card debts so many people are struggling with, and that's something that people in shaky financial straits just don't need hanging over their heads.
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