Payday Cash Advance

Payday cash advance are the fastest and easiest way of availing short term financial aid in times of crisis or emergency while your payday is a till far away. It is like an advance of your coming up salary to cope up urgent financial needs. With number of lenders available, there is a high competition in the market. Greater the competition easier it is to get the loans. This is because every lender tries to attract borrowers by their distinctive features of no credit check and immediate approval and delivery of loan amount (as less as an hour). The repayment is at the next payday of the borrower which can also be modified at the time of agreement. The interest rates usually range from $15 per $100 to $25 per $100. The maximum amount that can be availed differs from lender to lender. But an average amount given is $1000 to $1500 depending on salary of borrower.

The payday cash advance is a boon for low income groups who tend to avail advance in order to fulfill inevitable situations like paying education fees, medical assistance or recovery from a natural or man-made disaster. However, payday lending cannot be categorized under traditional financial institutions. Hence there are high chances of exploitation of the borrowers in terms of escalated interest rates and direct debit repayment policies which can lead to debt traps. Hence it is extremely important to have certain regulations on payday cash advance lending to curb these situations.

There has been legislation passed on payday cash advance lending at almost every level. One of them at Federal level which has proved to be successful is The Truth in Lending Act which requires the lender to disclose information about fees and interest rates up front, for instance, and any and all other federal statutes applicable to financial services. Apart from this, several regulations are there at state level. These regulations differ from state to state. Some states do not cap interest rates, the amount of the loan or the length of the repayment periods while few states cap only the amount that can be borrowed. While some states specifically ban payday lending from operating legally. While many states including Washington D.C. have regulations which govern the maximum or minimum length of time the loan can be made for, the maximum amount that can be borrowed and the maximum amount of interest or fees that can be assessed. Many payday lenders register as corporations on tribal lands to take advantage of Sovereign immunity which safeguards them from being sued even if they indulge in illegal practices. All these regulations are subjected to changes from time to time.

These regulations keep the lenders under supervision so that undue advantages are not taken and the rights of the borrower are secured. The ideal situation will be when both traditional institutions and payday cash advance lenders handle the traffic of borrowers from different financial strata and together lead to overall economic development of the states.

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