Cash advances are also called, payday loans, payday cash advances and other common names indicating loans before payday. They can be a useful tool after bankruptcy.
When used responsibly, if you kept current on your bills through a cash advance loan, you can actually rebuild your credit history. The key is to use these cash advances for urgent or emergent situations, but people have been known to avail the loans to pay bills to establish a good credit history.
If this is something you plan to do, it is advised that you know exactly what a cash advance loan involves to the letter, and that you pay it back in the term you agreed upon in your contract. You may even want to consider consulting a financial planner for further help on reestablishing your credit.
Faced with a financial emergency, it is better to apply for a cash advance than skip a bill payment for two reasons. First, after bankruptcy the best thing you can do to rebuild credit is to pay your bills on time. If you are 30 days past due or longer, it will take three years for it to be removed from your credit history.
The second reason to use cash advances is to save money on late fees. Often a $30 late fee on an account will be more expensive than the financing fee of a payday loan. The same is often true with loan payments and bank charges.
If that is not the case, then you may want to find another way to make your payment on time. Your ultimate goal is to repair your credit, not create more problems.
Shop payday lenders just like you would shop for any type of service. Compare fees and interest rates, as well as, repayment options and customer service.
Realize that not every lender is the same and sometimes a super good deal on a loan that is significantly different than those of other lenders, can be a scam. Lenders can reel you in with a good rate and then tack on more fees once you avail the loan.
Finding a lender who has been in business for at least five years can be a good rule to follow. If you are still concerned, you can look on the Better Business Bureau website to investigate the lender you are thinking of working with.
Consider looking on the Internet for a payday lender. Many of these online lenders offer instant approval with no faxing of paperwork required. It is also much faster to compare rates and fees of online.
It would be better to find a brick and mortar lender to do business with.
This way, you can deal with the staff directly and follow your instincts if any red flags pop up.
Cash advances are meant to be a short loan until payday. The high costs of payday loans come when people put off repaying these loans and the interest fees add up. Plan to pay back your cash advance on your next payday.
The reason this happens is because when you don’t pay your loan back when you’re supposed to, you end up extending it and getting more fees tacked on.
Then you also end up getting more interest charged.
This adds up rather quickly and is not a scenario you want to find yourself in. Good planning before you take out a cash advance loan is going to keep you informed and safe.
But if you can’t pay your loan back, talk with your payday lender; every lender can be slightly different and may or may not offer a loan extension plan. You can pay just the interest charge for that period or make only a partial principal payment. Above all, you don’t want to skip a payment, which will add up fees quickly.
Once you get the process, which is ultimately quite easy, you can avail these kinds of loans for future emergencies like car repairs or medical expenses. The industry was actually created for that kind of situation, not credit repair, but as mentioned earlier, if you are smart you can use this kind of loan to help restore your credit.
Once you have gotten through your current financial emergency with a payday loan, start an emergency savings fund. By saving as little as $10 a week, you can have $520 in an account after a years time.
There are many other things you can do repair your credit and change poor financial habits.
Jack R. Landry has a PHD in financial services and has written hundreds of articles relating to consumer services and online payday loans. He has been a consumer advocate for
nearly 25 years.
Jack R. Landry