The Dangers of Cash Loans
Posted on 27. Nov, 2011 by admin in Finance
Financial problems are common in today’s economy. Many establishments offer loans in relatively small amounts to employed individuals for a period of time. These loans are commonly known as cash advances, check advances, post-dated checks, but all are considered to be cash loans or “payday loans”.
It is relatively easy to obtain one of these loans; oftentimes, no credit check or collateral is required. All that is needed is proof of employment, some form of government identification and proof of a bank account. In most situations, the lender will require a post-dated personal check in the amount of the original loan, plus a small fee, made payable to the lender. This ensures that the loan is either repaid within the specified time frame of the loan or the lender cashes the check.
These loans are not without their risks. The calculated annual percentage rate (APR) is very high in relation to the amount borrowed. This can prove to be problematic for those already experiencing financial problems. The additional expenses imposed by a payday loan can lodge the borrower further into debt with each passing day, thereby exacerbating the original problem. Cash loans are tightly regulated by the U.S. Government which controls how much can be borrowed at a time while certain states have made cash loans illegal.