It’s been years since critics have been tagging non-bank direct lender loans like payday cash advances as a very expensive product. Yet the demand rises and today millions of Americans and another few millions worldwide depend on these loans – many being repeat borrowers too. This goes to indicate that there’s substance in the deal which serves value to its customers. Being a direct lender who chooses to serve transparently, we at CapitalPaydayCash present a quick and short article where our borrowers can understand a simple calculation (trust us, there’s lesser mathematics involved than what it sounds like) that make help get the best out of cash advances.
Why are they assumed to be Expensive?
Non-bank direct lenders are required by the law, to indicate the APR of the loans provided. The APR in simple terms, is the percentage rate of interest that a loan would accrue in one year versus the principle amount.
These loans unlike more traditional loan options, do not feature compounding of interest which is an easy way to make a loan seem less expensive than it is, especially over longer terms. However, many people tend to not notice this fact and try to compare the interest rates of different types of interest with one-another. A more practical way however, would be to calculate the final amount to be repaid and compare those totals, but not much attention is being paid to that reality.
What we mean to convey here, can be seen simply in the fact that at a 100% rate of interest, a cash advance for one month shall be cheaper than what a 10% monthly rate of interest of a duration of 10 months, compounded semi-annually would end up costing. But many critics tend to overlook this reality.
Hence while the cash advances have a high APR, the fact that they feature short terms, can make them end up being less expensive than other loan products with longer terms.
Understanding the Short Term Advantage
There are advantages of loans that come with very short terms and many people who understand that one fact well are likelier to use such loans to their advantage and less likely to end up getting adversely affected by any such loan.
When short term loans are affordable to repay, here are some points that can make short terms of loans advantageous:
- Early freedom from debt
- Interest accrues with time and shorter the time, lesser the interest amount paid
- Easier understanding of interest scheme and fees
- Typically quicker loan disbursals
- Only shorter term loans can be available without a credit check
- Typically simpler terms of eligibility
- Easier application process
Staying Safe while taking Cash Advances
Many borrowers tend to overlook some critical points while taking a cash advance and this tends be a mistake that often costs a lot. Here are point we believe, all our borrowers must pay attention to, so they could remain safe when taking cash advances:
- Choose the right length of term: The shortest term that shall be safely repayable, would be the least expensive term, making it a good choice.
- Compare final repayment totals: Are multiple loan options available and feasible for you? The way to really compare what’s cheaper, is to understand the final total amount you pay, and then see which one is lower.
- Only borrow what you can repay on time: Loans are expensive. Not repaying them end up making them more expensive. It’s important to ensure you borrow what you can repay on time and in the situation that you wouldn’t be able to do so, it is a must to understand your contract and choose the right way to extend the loan.
- Understand that payday cash advances are intended for emergencies and urgent needs: Borrowers sometimes use these loans for less needed purposes while that’s not what they’re designed to be used for. These are expensive loans which need to be used wisely and not too frequently.
- Keep things ready to get a quick loan quicker: Most borrowers apply for these loans in an urgent need. When time is running against you, preparation is the way to arrest the possible delays and this applies for loans to. Know what you need to submit and be ready with it while applying, so you can save your lender and yourself some valuable time during the process.
Choosing the Right Lender
One of the things to really look out for when choosing a non-bank direct lender, is the legitimacy of the lender. Finding a legitimate lender today, is easier than it once was – thanks to the internet, one can find reviews and past customer experiences of direct lenders online.
If you’re looking for a payday cash advance from a trusted direct lender, you can put in a query with us right away, using our application form.
