It is important to understand the true cost of obtaining a loan from fast direct cash advance lenders. With short-term loans showing an APR in the hundreds and in some rare instances thousands, how is one to understand how that interprets into a loan of only a few weeks? Since interest is the amount a third party money source will charge a borrower for the use of their money, how much a person is willing to pay will measure the final cost.
When a person signs a contract to borrow money from a business, there will be interest placed on the amount borrower/spent. The payoff terms will help the borrower to understand how the money will be charged. Will the interest accrue each day that the money is not returned? Will there be a set term where interest is charged on the balance on that day? It is important to fully understand the terms and conditions set by the company you choose to do business with.
Short-term loan lenders must inform a borrower of the APR rate even though the loans are typically set for a 2 week term. This information is found within the terms and conditions. A high APR is awfully scary for those borrowers who do not understand how it works. An annual percentage rate defines the cost of interest over a year’s time. A credit company may show a rate of 20.99%/year while direct cash advance lenders show 36.99%/year. If you look at the numbers only, it sure does sound like the credit card would be a better choice.
A credit card company expects only a very small percentage of the outstanding balance to be paid off each month. Many people feel good about ‘affording’ the expense and willingly use credit for many types of money matters. There is no ‘full payoff’ date set, just monthly statements which report the new balance, the interest fees applied and the calculated minimum balance with its due date. People like to have the no pressure payments and the temptation to spend more of their credit with only a slight increase in payment demand is appreciated.
Online direct cash advance lenders do things a bit different. The interest is high for a reason. These loans do not promote minimum payments. In some states, the loan MUST be paid off on the original due date. The concern of additional interest fees is why state regulation was created. Controlling how many loans and placing a cap on interest and loan amount will keep a borrower safer in the long run. Direct lenders expect a full payoff right away. This in itself sets it apart from credit cards. This money is not a revolving account where a person may keep spending; the money is a one-time transaction to be paid off quickly. So how do annual interest rates apply to the short-term loan industry? They shouldn’t apply at all! If a person takes out a short-term loan with the idea of turning it into a long-term payment plan, the APR would hopefully change their mind.
Use a short-term loan as it is set up to be, a fast money opportunity to connect payments with the next paycheck. The money gets paid off fast and the one-time fee makes the transaction a positive and affordable budget helper. The loans are risky for both lender and borrower. If the debtor takes too long to pay it off, the final cost sharply rises. The lender also takes a risk by offering no credit check loans to people who most likely already have money troubles. There are winners from both sides when the transactions run smoothly. There are also losers on both sides when loans go into default. Get a direct cash advance loan and plan to pay it off soon.