Reasons Why Many Companies Offer Cash Advances
If cash advances are new to you, then it is normal that you want to check on their legality first. Cash advances are legal all throughout the states. Specific fees, terms and maximum cash outs per transaction may vary depending on the guidelines set by your state and lender. All in all, the business of cash advances is healthy so you shouldnâ€™t fear. In fact, studies show that even during and after the recession, this is one of the best industries that continue to flourish. Here are a few reasons why.
Tremendous Profit Potential
Cash advances are subject to fees and interest rates. The proper collection of these rates ensures that the lender gets enough profit from the transaction. There are states that dictate the size of the fees but there are also some like Connecticut and Delaware that allow lenders to determine how much profit they collect from cash advances.
The Cash Advances Industry Wonâ€™t Die Soon
Even the best financial institutions may end up closing and/or filing for bankruptcy; but not the micro-loans like cash advances. Statistics show that the micro loan industry in the US is estimated to be at about $40 to $50 billion with a growth rate of 20% to 30% every year. And this information remains to be the same regardless of the over-all economic situation.
Note that about 70% of American households live in a paycheck to paycheck basis. One small out-of-the-budget spending can lead to emergency loans. So as long as there are people who are in need of some quick funds, there will always be micro loan lenders. While it is true that cash advances have a high default rate and loan firms need to be able to collect from borrowers in order for their business to grow, the problem can be easily addressed with a good debt collecting system. It is here that the best and most reputable companies are easily spotted.
Why Cash Advances are One of the â€œBestâ€ Solutions to Financial Troubles
The risks in cash advances do not only apply to lenders, they also extend to the borrowers. If you make a habit of getting cash advances, then you will most likely end up living beyond your means. Cash advances are short-term loans best used during emergency situations involving your health and general welfare. Spending the money on gifts and other things that are not very important might get you married to your loan company.
Despite the additional charges, cash advances offer the easiest or best way out of any financial predicament if you are unable to obtain traditional loans. They are fast, secure, private and easily accessible. The Internet has even made the application more convenient because it eliminates the need to run paperwork and visit a physical location. The best loan firms can also help you re-establish your credit score to get you above the credit worthiness line again.
Whatever is your reason for using cash advances, one thing is for sure: you can benefit from cash advances in many ways. The only thing to remember is that you shouldnâ€™t include cash advances in your monthly budget. Keep in mind that cash advances do not always and every time offer the best solution to your financial needs.