Check Cash Advance

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Several finance companies sometimes offer small, short-term, high-rate loans that go by variety of names: payday loan, cash advance loans, check cash advance loans, post-dated check loans or deferred deposit check loans. These loans are generally given for a short period of time, say for two to three weeks. Actually, there are times when emergencies crop up and we need some extra amount of cash. And approaching a bank for such an amount is a big waste of time. Therefore, for these kind of unexpected situations there is check cash advance loan.

In case of check cash advance, a borrower writes a personal check payable to the lender for the amount to be borrowed plus a fee. The company then gives the borrower the amount of the check after deducing the fee. Fees charged for these types of loans are usually a percentage of the face value of the check or a fee charged per amount borrowed. And suppose the borrower wishes to extend the tenure of the repayment, say for another two weeks, then it is necessary to pay the fees for the extension.

Before going for a check cash advance, it must be known that just like payday loan, this cash advance loan secured by a personal check is also very expensive. The interest charged on the loan amount is usually 6% to 10% higher than a regular loan. Now suppose, the borrower writes a check for $115 to borrow $100 for 14 days. And the lender agrees to hold the check until his or her next payday. After this, the lender deposits the check and the borrower exchange the check with $115 by paying in cash. Or otherwise may rollover the check by paying a fee to extend the loan for another two weeks. Therefore, it can be seen that the cost of the initial loan is a $ 15 finance charge and 391% APR. Now, incase of rollover the loan, the finance charge is coming to $60 to borrow $100.

However, it is a true fact that the check cash advance is faster and easier than any other type of loan. Moreover, it doesn't include any kind of hassles like credit checking, faxing documents or bank statement. The only requirements are: the income proof, a checking account, and a proper identification. But as it is mentioned earlier that this loan is an expensive one as the interest rates are quite high. Therefore, some care must be taken before applying for this loan:

- Search for credit offer with lowest APR; find out the terms before deciding and always try to consider a small loan.

- Next comes, comparing the APR and the finance charge (includes loan fees, interest and other types of credit costs) of credit offers to get the lowest cost.

- Find out from the creditors about the additional finance charge in case of any extension.

- After deciding over the cash advance finally, the main thing that must be taken into account is the amount to be borrowed. Means, borrow only the amount that can be afforded with the paycheck.

Therefore, the check cash advance can be of great help in case of financial crisis but only if it is availed with some care and through research.