Cash advance loans are marketed as easy to obtain, no questions asked convenient loan options. There is no doubt that these loans fit the above description perfectly. However, this is not a complete description. Cash advance loans are very expensive loans. Further, these loans can greatly push your finances towards a crisis if not handled properly.
Your position may go from bad to worse if you do not handle cash advance loans with care. Treat it like a more convenient form of credit card debt with fewer restrictions. If you handle it carefully, you can easily overcome any short term crisis until your next payday.
The first and the most important requirement is necessity. If you do not need cash urgently, you should not be using this option at all. What is meant by urgent necessity? This is a subjective point. What is an urgent requirement for some may not be the case for others.
Make sure you are not going in for this loan for fun or enjoyment. Financing your vacation with the help of cash advance loans does not make sense. On the other hand, if somebody has met with an accident and if you need cash urgently, going in for a payday loan is justified. Expenses which cannot be postponed without severe damage to your credibility and finances can also be met using payday loans.
The second factor is the ability to make repayment. You will have to submit a copy of your pay stub to your lender. However, merely earning a specified amount per month is not going to suffice. You should have sufficient cash left in hand. Treat cash advance loans like advances from your employer.
Just as the employer will deduct the amount before crediting your payment, the lender will withdraw the money from your bank as soon as your salary or monthly payment is credited. Can you manage the rest of the month with the reduced amount? Or will you be approaching the lenders for a cash advance again? It is advisable to stay away from such a vicious cycle.
The third factor is the interest rate charged. This form of loan is the most expensive option around. However, this does not mean there is no scope for bargaining or negotiations in the interest rate charged. There is a lot of competition between various service providers. You can easily take advantage of this competition to reduce the interest rate payable on the loan.