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Direct Cash Advance

Short-term loan lenders must inform a borrower of the APR rate even though the loans are typically set for a 2 week term. This information is found within the terms and conditions. A high APR is awfully scary for those borrowers who do not understand how it works. An annual percentage rate defines the cost of interest over a year’s time. A credit company may show a rate of 20.99%/year while direct cash advance lenders show 36.99%/year. If you look at the numbers only, it sure does sound like the credit card would be a better choice.

A credit card company expects only a very small percentage of the outstanding balance to be paid off each month. Many people feel good about ‘affording’ the expense and willingly use credit for many types of money matters. There is no ‘full payoff’ date set, just monthly statements which report the new balance, the interest fees applied and the calculated minimum balance with its due date. People like to have the no pressure payments and the temptation to spend more of their credit with only a slight increase in payment demand is appreciated.

Online direct cash advance lenders do things a bit different. The interest is high for a reason. These loans do not promote minimum payments. In some states, the loan MUST be paid off on the original due date. The concern of additional interest fees is why state regulation was created. Controlling how many loans and placing a cap on interest and loan amount will keep a borrower safer in the long run. Direct lenders expect a full payoff right away. This in itself sets it apart from credit cards. This money is not a revolving account where a person may keep spending; the money is a one-time transaction to be paid off quickly. So how do annual interest rates apply to the short-term loan industry? They shouldn’t apply at all! If a person takes out a short-term loan with the idea of turning it into a long-term payment plan, the APR would hopefully change their mind.