Instant Cash Advances – Is the Criticism Warranted?
No faxing loans, payday loans and instant cash advances are all products offered
by various lenders to put some money back into your account when you need it. They have also been banned in many states and the Government has intervened to regulate interest rates and set borrowing limits, to protect both the lender and the borrower. There has also been a lot of negative publicity and criticism directed towards these short term loan solutions, and this is something that needs further investigation.What Kind of Criticism Exists in Relation to Instant Cash Advances?
The most obvious criticism was first directed towards the interest rates applied to instant cash advances, and the fact that lenders were seen to be taking advantage of people in a financial crisis, through applying crippling and unnecessarily high interest rates. This, coupled with the fact that some lenders were also unscrupulous in their approach, has led many individuals and families right into the depths of despair with spiralling credit issues that far outweighed their initial need for the instant cash advances in the first place. Once in the spiral, it was very hard to escape, and many who found themselves in this situation continued to borrow in order to pay off the previous debts that were overdue for full payment.
Another criticism revolves around the fact that the system was not controlled in its initial stages, and therefore people were able to borrow through instant cash advances, an amount that was way beyond their means to repay. When facing a financial emergency, people jumped in to borrow as much as they could, without actually weighing up their options, restructuring their budget, or factoring in the repayment amount and their ability to repay it in full, within the time frame specified.
Considering the number of lenders that now offer instant cash advances online, and the fact that people with a poor credit history also have a high chance of approval, it is no wonder that there has been a flurry of criticism against these loans. Now that regulations are in place and the Government has put regulations and restrictions in place, are these criticisms still warranted?
What Benefits Can Be Gained From Instant Cash Advances?
With all the criticism, perhaps you would think that there are no benefits to obtaining instant cash advances, however there most certainly are. Although not an exhaustive list, here are some of the benefits in a nutshell:
Easy application and approval process
Able to get emergency funds when you need them desperately
Provides poor credit history customers a chance to improve their rating
Maximum borrowing amount is approximately $1500 across all lenders
Interest rates are based on an annual percentage, so in reality you are looking at paying $15 to $25 in interest for each $100 that is borrowed
Amounts are able to be repaid on your next pay cycle
Funds are directly deposited into, and repayments are withdrawn from, your nominated savings account automatically
Is the Criticism of Instant Cash Advances Warranted?
Now that we have identified the main criticisms and the main benefits, you need to decide if this criticism is warranted, or if perhaps, the instant cash advances being offered can actually help people out in certain situations.
I would say the criticism is warranted if there were no capped borrowing limits and if the interest rate applied was not calculated annually, but per loan applied for and received. I would most definitely say that the criticism is warranted if people obtain these loans purely because they want some money to splurge over the weekend or to go on a shopping spree.
The minimum requirements include being over the age of 18, in stable employment with a regular wage, being a legal citizen, and having an active bank account that has been open for at least 3 months. With these minimum requirements, plus the fact that you can borrow no more than approximately $1500 at any one time, and that the repayments will be made when your pay hits your account, many people who are struggling financially before their next payday, can safely take advantage of instant cash advances without getting into a spiralling debt cycle.
The key to making instant cash advances work for you is to only apply for them when you desperately need them, only apply for them if you know you will have the funds available to pay back the loan in full, and only apply for the exact amount you need immediately.
Instant Cash Advances Is the Criticism Warranted?
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