Commonly Asked Questions about Cash Advance Loans
Although cash advance or payday loans have been around for some time and most people have a relatively good idea of what these loans are and how they work, it is still common for questions to be asked. After all, this is still a legal contract involving someone borrowing money so the more a person can learn the easier it is for a decision to be made regarding a cash advance loans.
One question that is asked often has to do with qualification. Typically, payday or cash advances lenders use a variety of prequalifying factors as a part of the application. While each lender is slightly different, the crux of a loan like this is that the applicant must have a job with steady income and a bank account in good standing. Other criteria for being approved would be that income has to be a minimum of $1,000 per month and the individual would need to be at least 18 years of age, and a United States citizen.
The speed in which money from a online cash advance or payday loan would be received is also questioned. After all, most people that want a loan like this need money fast. Again, some differences exist from one lender to another but on average the borrower getting the loan through a storefront lender would have the money in 30 minutes to three hours whereas money coming from an online lender takes a little longer but still fast, usually in 24 hours.
People interested in a cash advance or payday loan through an online lender ask about fees. Reputable lenders provide all loan information so the individual can make an educated decision. Along with the interest rate, lenders charge lender’s fees. The amount is minimal, usually around $30. However, some dishonest lenders hide additional fees in the small print of the contract. For this reason, people taking out a payday loan should always read the fine print before signing on the dotted line.
Another question pertains to how credit would be affected with a cash advance loan. For starters, most lenders, whether online or storefront do not require an applicant’s credit report. This means even people with bad credit would be approved. Because this is still a legal financial contract, if the borrower paid the loan back on time and according to the terms of the loan, the credit would not be affected at all in that many lenders do not report loans in good standing to the three reporting agencies.
On the other hand, if someone took out a cash advance loan and missed payments, ran over the scheduled payoff without making further arrangements, or simply skipped out on the loan completely, the lender might report to the credit bureaus, which would have a negative impact on the person’s overall FICO score.
The problem with conventional loans versus payday loans is that when people complete a loan application with a bank or credit union, the lender would run an inquiry on the applicant’s credit. If credit were bad and the loan denied, the individual might go to a number of lenders, each running a report. Credit reports with multiple inquiries are seen as bad, lowering a person’s score. With a payday loan, since no credit report is run, there are no inquiries.
Finally, people interested in a cash advance loan want to know what the restrictions are regarding how money from a loan such as this could be spent. The great thing about a payday loan is that there are no restrictions. Although most people choose a loan such as this because of a financial emergency or unexpected expenses, the truth is that money could be spent in whatever way wanted. This means the individual could go shopping, buy new clothes, and put a down payment on a car, and go on vacation, and so on, without the lender ever asking.
