When in
financial difficulties, one may find taking cash advance loan or a payday loan
very helpful, but like other things, cash advance loan too comes with its own
pitfalls. One must be aware of how such loan works and things to consider
before opting for it.
How a Cash
Advance Loan Works?
In a cash
advance loan, the lender advances you a certain amount for a specified period,
mostly 14 days, in lieu of a personal check from the borrower (in case of a
secured loan) or bank account or credit card details (in case of an unsecured
loan).
The borrower,
on the other hand, agrees to pay an amount to the lender after the specified
period which is higher than the amount borrowed. The difference in both the
amounts is the fees of the lender. Generally, the fees range from 15 to 20
percent of the total money borrowed and turns out to be 1000 percent or more
when its equivalent APRs is calculated for a period of one year. With such
exorbitant fee, it becomes necessary to have a fair knowledge of the terms and
conditions of the contract before signing it.
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