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The Reality of Cash Advances: Separating Fact From Myth

The fallout from the recession has included some negative hearsay about the cash advance industry, which is also referred to as the payday loan or payday advance industry. Unfortunately, much of this information, which comes from state lawmakers trying to find areas of blame for the country's economic crisis, bears little resemblance to the truth. Our goal is to provide fast, convenient and easily obtainable lending options for people who need them at reasonable rates--and our intentions don't extend any further than that.

A Good Deal However You Slice It

Probably the most common misconception about cash advances is related to their cost, which isn't anywhere near as high as some detractors would like you to believe. While the interest on a bank loan might look more attractive on a month-to-month basis, keep in mind that those costs are spread out over the life of the loan and add up to a much larger total when all is said and done. By comparison, a short-term lending service carries a one-time charge that amounts to exactly what it's presented as. Furthermore, if you calculated the fees and charges of other common expenses, such as a bank's overdraft fees or a credit card's late charges, you'd find that the percentage can be as high as double the charge for the convenience.

In and Out

Another common myth, which says these services trap borrowers in a never-ending cycle of debt, seems to confuse the practice with the revolving lines of credit associated with credit cards. In truth, getting a loan through one of our trusted providers is quite the opposite. Since the balance of your loan is paid off on your next payday, your account is closed within two weeks of your borrowing the money. There are no additional fees or charges beyond that date. The only exception can occur in states that permit rollovers, which allows borrowers to pay a small fee to put off paying the balance for another two weeks. But even in those cases, the maximum number of rollovers you'd be allowed are usually four. Furthermore, it's not an option we encourage. We're in the short-term loan business and that's where we want to stay.

Good Business

Some opponents have even gone as far as to blame the industry for contributing to the country's poor economy by willingly loaning money to people who don't have the means to pay it back. Again, there's no truth to the allegation. One of the few restrictions associated with getting a loan from one of our providers is the total amount can't exceed what can be covered with a borrower's next paycheck. That's why more than 90 percent of all accounts are paid in full and closed within two weeks of approval.