Quick Internet loans, otherwise known as cash advance financial lending products, could actually work out to be less costly to you than a traditional loan, because you have to take into consideration the severe fees and penalties that banks charge if your account is overdrawn. Payday loan advance providers (from USA) argue that they are far more transparent than other banking institutions when it comes to lending money. With quick Internet loans, you are informed of the conditions of the loan up front, in clear, easily-understood language. Cash advance providers tell you how much you are to repay and give you a due date.
Compare this to traditional financial institutions, which often have a variety of contracts that pressure the client. Banks try to draw attention away from this practice by pointing out the high APR of online cash lending products. For example, the average APR of national payday loan providers has been approximated at 450 percent. However, APR is irrelevant in this case, as these loans are usually repaid within one calendar month. Using this standard 450 percent APR as an example, you can see that $250 credited at 9 percent interest will have you paying back somewhere around $274 at the end of the term of the loan. You can view all this information on their website. This contrasts with traditional financial institutions, which have complicated charges and costs components that seem purposely developed to confuse their clientele.
The charges and fees that are imposed by financial institutions when an account is overdrawn are far more expensive than the monthly payments made for online cash loans. In the above example, $26 interest was paid over the course of the loan. The overdraft fees normally charged by national financial institutions are $34.67. Therefore, payday advance loans are actually a legitimate way to avoid receiving extra charges and fines for being overdrawn on your bank account!
This explains why banking institutions are clamoring for laws to ban online cash lending products. They hide behind the old, over-used excuse that advance providers are ripping individuals off with excessive APRs, etc. Financial institutions and home lending organizations claim to have the best interests of individuals at heart, but in reality, they are defending their own interests.
Online cash loans are a genuine threat to the monopoly they hold. No longer will they be able to rip individuals off with complicated conditions and extravagant fees and fines. Besides, they cannot complain about unjust economic practices when they charge an APR of 27.9 percent or more for credit cards and more than 10 percent APR on lending products to be repaid, while offering those who keep cash in a bank account an amount of interest that is lower than the current level of inflation.
Ignore the overtures and orders of banks, and use online cash loans if you have a short-term economic problem. Even with the higher APRs, borrowing money from a cash advance institution is still a better bet than allowing banks to charge you excessive fees and fines for allowing your account to become overdrawn.