Taken in its entirety, there is a thriving industry solely dedicated to providing middle class America with all the cash assistance it needs in times of dire emergency. We can safely put aside those large financial institutions whose immense funds are largely reserved to fund corporate America in the billions and hundreds of millions. We’re referring to small to medium scale service bureaus who offer small amounts of bridge financing to let the average Joe meet ends in dire financial situations between paydays.
Lending has indeed become an industry in itself that the US congress as well as State legislators thought it best to enact laws regulating it not just for the benefit of the lenders but also for the people whose salaries don’t always allow them to meet maturing obligations.
Reasonable Interest Rates
Many critics have voiced their disapproval on the practice Paday loans foster over the years. They claim that instead of helping cash-starved folks rise above their economic predicament, lenders have grown to profit by their misery. This is a very superficial and mindless accusation. They most likely refer to the apparent high interest charges lenders levy on their loans.
It seems to escape the critics that cash lenders are as much being philanthropic as being astute businessmen. It takes no rocket science to understand that lending $100 will incur the same processing cost as lending a million, once the pre-qualification criteria have been satisfactorily met. More importantly, small time cash-advance-payday-loan which are basically you cash advance lenders, cannot earn reasonably if they adopt the interest rates that banks charge on multi-million dollar loans they grant companies or even nations.
There, a 5% interest can already earn sizeable profits for the financial institution, while applying the same rate on a $200 loan will hardly pay for the paperwork or internet bandwidth in any transaction of such minute magnitudes.
So it’s good to bear in mind that those interest rates have a good math behind them, good enough to sustain lenders with enough margins to keep themselves afloat – the longer it is to make themselves available when you need help.
When to approach a lender
There are just a few occasions when a faxless-cash-advance is your only hope to get over your economic predicament that can’t wait until the next payday. A family member getting hospitalized or a death in the family are no-brainers for anyone who have no emergency savings to take out a loan, be it a long term or short term bridge financing such as a cash advance loan. Mounting bills with arrears and late payment fees can be just as compelling. Not wanting to default on your home mortgage or credit card payments is another.
Getting a bit short for that microwave oven, washing machine or dryer you desperately need for home chores may be good enough reasons to take on a loan. But only if the amount won’t eat up all your take home pay when the maturity date on your next payday comes. Otherwise, you’d be creating a vicious debt- pay- renew cycle you could be stuck in. GP