Paying Back the Payday Advance
At one point in his life or another, anyone is likely to experience some sort of financial crisis. It may be a simple cash flow problem or maybe even a mortgage issue. Whatever the case may be, what’s undeniable is the fact that there are a lot of expenses that just can’t be foreseen, no matter how sound one’s financial planning may be.This is why a lot of people have opted to take out a payday advance. These are usually the people that have problems with their cash flow. Usually, an unexpected expense suddenly comes up which demands immediate financial attention. Sometimes, these emergencies just cannot be covered by the family’s cash flow. This is the time when folks decide to apply for a cash advance.
The application process itself is easy and straightforward. In fact, one can get approved and receive his loan within a few hours after his application. What’s more difficult is actually settling or paying back the borrowed money. Here are some options.
Pay the Finance Charge Only
All cash advance loans will come with a finance charge. It may come in many names or titles but all of them serve the same purpose. This is the charge lenders apply on the loan as an interest rate. This is basically where the lenders earn their money.
One option is to only pay this charge while entirely disregarding the actual loan balance. This may not be the wisest move as it follows that the borrower will need to pay the same amount again come the next payday. This is on top of the fact that the principal amount remains the same. Although it may be the cheapest option on the onset, one will definitely end up paying more in the long run.
Finance Charge and Then Some
Another option for borrowers is to make two ‘separate’ payments on the loan. The first payment is for the finance charge on the loan while the second one can be used to decrease the principal amount. Aside from paying the interest rate, borrowers are also able to lessen the amount thereby making it easier to settle the full balance. This is sort of the ‘slowly but surely’ approach as it may take some time before the entire loan is settled. Nonetheless, it is still better than only paying for the finance charge. However, borrowers must also be wary of the limit of payments. That is, they should be aware of the lender’s limit when it comes to settling the full amount.
All in One
The best alternative is to settle the entire balance as soon as the next paycheck comes in. The reason why a payday advance is much easier to take out when compared to an ordinary loan is because it entails a high interest rate. If one is able to pay back the entire balance using his next paycheck, then he would have paid the least amount of money to the lender.
