A cash advance loan may solve a teenager’s money problems temporarily, but when it is time to pay the loan and fees back, many realize they don’t have enough money to cover it.
Cash Advance loans are a type of short-term loan that may be attractive to many teens and young adults when they need money fast because the qualification and application process is relatively simple. Cash advance loans also go by a variety of other names including payday loans, check advance loans, quick cash loans, or deferred deposit check loans. These loans are often attractive because in addition to applying at a local office, borrowers can also apply online and fill out a quick application and learn whether they have been approved or not within minutes.
While some types of cash advance loan services will ask their borrowers to fax in additional documentation like pay stubs and banking information, others do not require any proof of documentation in their loan application process. Either way, when a cash advance loan is approved, the money is usually deposited into the borrower’s bank account within 24 hours. The lure of quick and easy cash may entice a lot of young adults but one big problem is that these types of loans always come with interest rates that are much higher than any other type of loan. Some states have an annual percentage rate ceiling that cannot be exceeded, but many others do not and that means the lender can charge as much interest or service fees as they want. The interest rates and fees charged for cash advance loans are usually a percentage of the amount borrowed or a fixed fee for every $100 borrowed.
The real problems start when people extend or carry their cash advance loan balances over to an additional period of time and that triggers more additional fees each time. The result is often astronomical interest rates on the loans range that can range from 250% to nearly 900%. The rates are so high that most cash advance lenders don’t even advertise or quote their interest rates at all, and instead simply state their basic fees without talking about what the true rates are when the typical borrower gets stuck in a cycle of compounding fees over the length of a loan.
Many online cash advance lenders also have a practice of automatically renewing a loan every month, a situation that causes even more additional fees for the borrowers. A cash advance loan may solve a teenager’s money problems temporarily, but when they have to pay the loan and fees back many suddenly realize that they don’t have enough money to pay for it all and then they have to take out a new cash advance loan just to keep up with the payments on the old one, creating a situation that few young people can afford today.
If you are considering using the services of a cash advance loan lender, try to borrow only as much money as you can afford to pay back with your next paycheck and still have enough cash left to make it through to your next payday. Spending more than you earn is always a bad thing no matter how much money you might have, and cash advance loans represent the most expensive solution to any teenager’s or young adult’s money problems.
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