Why not to default on a payday advance?
Imagine you work in a company and every month you get a payday advance. How would you like an experience like this? You would be delighted for sure. Unfortunately, this is a Utopian dream that never comes true. However, there is a way you can get a pay check advance when you know where to look out for.
Every year, millions of pounds are disbursed as pay check advance and there are thousands of people that benefit from these advances. A payday advance is a concept where you reach out to a loan provider that offers you a short term loan. You apply for your loan online and your account is credited with the loan amount. You authorize the loan provider to debit your account on your next payday.
There are many critics that point out at the seemingly exorbitant rates of a pay check advance. It is true that when you calculate the APR the rate of interest seems too high. However, when people handle their payday advance well, they don’t feel that they are paying too high an interest. For example, you take a short term loan of Ł100 on the 1st of September and pay back Ł130 on 30th of September – a mere Ł30 as interest.
However, there are people that default on their pay check advance. This is a cardinal error that should be avoided at any cost. You could pay through your nose when you do something like this.
For starters, when you default on your payday advance you lose your credibility with the lender. If you need another pay check advance in future they may not be willing to lend you a helping hand. Remember that most of these lenders of short term loans give you a loan even when you have a negative credit rating. If they don’t lend you money no one else will.
Secondly, when you don’t close your pay check advance on the first payoff date, the lender will debit your account for the interest amount and create a new payday advance account that needs to be paid off next month. So, instead of paying Ł30 as interest, you end up paying Ł60 as interest. This is where things start getting expensive.
Last but not the least, when you default on your pay check advance you end up paying hefty penalties. Your lender levies a penalty because you defaulted on your payday advance. Your bank also levies a penalty because your authorization to the lender bounced due to lack of funds in your account. It is a double blow for you. So, the Ł60 interest mentioned in the above paragraph becomes heavier in amount.
Managing your pay check advance is very important for you. As you pay off your first payday advance you become eligible for more loans of larger amounts. Take this opportunity and you will have a fantastic backup for your sudden financial needs. Lose this opportunity and you could be doing irreparable damage to your credibility and lose the only chance you have.
How would you like if you get a pay check advance? There are providers that can give you a payday advance provided you pay them back on time.
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