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These days payday loans have become terribly popular and that is true, it seems that anywhere you look there is an offering for a cash advance to give you some extra cash you are looking for until the future paycheck arrives. Are payday loans actually a smart idea? Indeed, they can be a rescue when you are in terrible shape financially though there are a few key aspects that you have to weigh before you really get that kind of loan.

At first, let's take a look in more detail at how payday loans really work. As a rule the lender would be willing to loan you a specified sum of cash for a short time period. For example, let's say you desperately require $200 dollars to meet some unanticipated expenses. You can for instance get the $200 and sign a postdated check for 14 days therefore to repay the principal amount of the loan plus the interest rate, that can be about 50 dollars for that amount of payday advance. So, after 14 days time the loan company expects to cash that check for 260 dollars.

Prior to obtaining the cash advance, it is extremely important to decide for yourself if you would certainly be able to afford to completely repay the loan by the due date. Most often payday advances are obtained for a 2-4 weeks period. If it turns out you are not able to pay the loan when it comes due most payday companies will be quite willing to offer the extension of your loan ; however, if you somehow do that you would be charged even more commission.

This is another important point since it might be difficult to find out how much interest you're paying on cash loan when it is extended for a few times. The unfortunate truth is that depending on the number of loan extensions you may simply be paying 300% interest. As there is no specific standards with regard to the amount of fees charged on payday advances if you roll them over in that manner. As you may well imagine, with this type of charges, you may never manage to pay back your payday advance. Based on the number of times you continue to roll over the payday, this may actually result in your slipping into significant debt. If, for some reason, you rolled over the loan 3 months after the initial paydate you would owe around $500 ; twice the loan amount you initially received.

There may be some other problems arising while getting a cash loan. For instance, if you happen to unfortunately be working with an employer who is not reliable enough this may result in your having not enough funds to pay back the loan on your payday. That is a true problem if the lender would deposit your post-dated check prior to the due date or either you don't have enough money in your savings account to repay the loan.

When all these factors are considered, cash loans may be a huge risk and should only be taken in case you actually have no any other way out, such as getting a traditional loan through your credit union or bank, getting money from your family members or close friends or just wait until your coming paycheck arrives.