Payday Loans In Depth - Payday Cash Loans

Payday Cash Loans - A Free Advance?

article by Kip Johansen

There is absolutely zero reason why payday cash loans should cost as much as they are. 300% APRs are not acceptable - and they shouldn't even be legal. But they are - the lenders have found a way once again to get around federal regulations, this time using the Internet and state-specific legislation to aid their high cost crusade. But rather than bash the costs of your payday loan and tell you all what a horrific deal you are getting, lets take a look at how much your payday cash loans should cost, and how much they could cost.

The punishment does not fit the payday cash loans crime

When you apply or a payday cash loan you are simply requesting your payday a little early - thats not a big deal, and with the right verification your lender should know that you're good for the money. To set a cost of these cash advance services demands we take a look at similar financial tool - and for getting money to you that you don't yet have nothing comes closer than your credit card:

state-by state averages for credit card write offs differ, but the national level is around 3%. 3% of the time banks are forced to write off an account as lost - the person is not gonna repay their debt no matter what the bank threatens.
payday cash loans on the other hand carry slightly higher write-off levels - about 3.2% in the state of Colorado and it assumed to be about the same nationwide.
credit cards are forced by law to charge no more than 36% APR - which would mean, for a two week fast cash payday loan of $100, a charge of $1.40.

$1.40 per $100 you take out and your two week advance is right at that national usury level. Thats a little unfair to the lender, and we think that after the costs and fees the lender faces on each loan a charge of $10 per $100 you borrow should suffice and still bring them a profit.

Where we'd like to see payday advances go

But then we ask ourselves - how hard is it really to provide these payday cash loans? Couldn't banks just offer a similar service for you to access any time you needed extra cash, and they could just take the money form your account when your next check is directly deposited? How much would fast cash payday loans cost? Well, we think it might become free. There is no reason why banks cant set this service up, they lose no money in the process and the risk is about the same as a client overdrawing their account.

For the meantime however we just gotta keep paying these high costs for such intense financial aid.

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