Direct deposit cash advances provide quick access to short-term loans, but typically charge high financing fees ranging from 300 to 1,000 percent. Borrowers must allow access to their bank account for automatic repayment, and extending the loan can result in even higher fees.
From time to time, some people run out of money long before they run out of bills to pay. In such a case, a person may need quick access to extra money to buy groceries, buy gas, get car repairs, or pay a utility bill before their next paycheck arrives. In such a case, you can turn to a company that provides cash advances by direct deposit.
A direct deposit cash advance is a type of short-term loan. It allows a person to borrow money, usually for about seven days to four weeks. When a borrower is approved for this type of loan, the money is automatically deposited into their checking or savings account. This means there is no loan check to wait for in the mail. The borrowed money is automatically deposited into the borrower’s account on the agreed date, which is usually just 24 hours after the loan is approved.
Typically, a direct deposit cash advance requires the borrower to allow the loan company access to their bank account again when it is time to repay the loan. In such a case, the repayment is set up as an automatic withdrawal, and the borrower does not have to lift a finger to repay the loan. On the agreed day, usually the borrower’s next payday, the cash advance company automatically withdraws the payment from the borrower’s account, along with any fees it charges to finance the loan.
Cash advance deposit loans may seem like a good option when money is tight and options are few. However, these loans usually charge financing fees that are incredibly high. In fact, the typical range for cash advance interest rates is 300 to 1,000 percent.
To understand what kind of fees someone may face with direct deposit cash advance loans, consider a $500 US dollar (USD) cash advance taken over 15 days; a borrower may have to pay $150 USD or more to borrow the money for 15 days. When the expiration date arrives, you would have to pay $500 USD plus $150 USD in finance charges.
If a cash advance borrower is unable to pay the loan in full on its due date, they can extend the loan for another 15 days while they try to collect the balance due. If you extend the loan twice, you will pay $300 USD in fees alone. If you extend it four times, which is only 60 days, you’ll pay $600 in fees for the $500 loan. In the end, even if you have paid all of these fees all along, you still have to make a final payment of $500 USD plus a finance charge of $150 USD. This can cause serious hardship for someone already in financial straits.
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