The Cash Advance Controversy

It’s been the “whipping boy” of conventional banks and lenders for years. Maligned, abused and kicked around, the cash advance industry has achieved a new level of respectability.

The cash advance industry, also commonly known as payday loan, is at a significant crossroad. The widening perception of bank instability, cash-strapped consumers, rampant unemployment and a desire to avoid costly overcharges on checks has led to another look into this booming industry.

The key element of change has been a widespread and more common responsible consumer use of cash advance loans on a selected basis as a preemptive way to avoid falling into arrears and becoming delinquent on important bills. Falling credit scores ultimately hurt a consumer’s financial health and take a toll on the ability to make important purchases in the future.

Cash Advance Becomes Mainstream

It’s no longer the butt of jokes. Main Street USA consumers of every financial stripe are using cash advance loans to bridge the gap of unexpected financial emergencies that can’t wait until their next payday. Once the loan is paid back at the time of the next payday, the urgent need is met and the problem is solved.

Payday lending, also sometimes known as a “payday advance” or a “deferred deposit” loan, is essentially a short-term, two- to four-week loan backed by a postdated personal check that a borrower agrees to cover with sufficient funds out of his or her next paycheck. In effect, the borrower issues a postdated check to the payday lender in exchange for immediate cash, usually in the amount of $100 or $200. Some lenders will provide a short-term loan of up to $1500.

Cash Advance Search Engines

An emerging trend is the use of cash advance search engines that allow the borrower to submit a secured online application to multiple lenders at one time for best results. These sites are provided as a service to allow the consumer maximum reach for fast results from those lenders willing to work with the lender. It appears to be a service whose time has come.

Cash Advance Review Sites

Another search method gaining popularity are cash advance review sites. These sites will basically rate various cash advance sites that connect to lending networks, allowing consumers to make an intelligent decision on where to best apply.

Conclusion

Many consumers who utilize payday lending services have been called by a collection agency for overdue bills. It’s a viable solution whose time has come because cash advance services extend small amounts of uncollateralized credit to high-risk borrowers, and provide loans to poor households when other financial institutions will not. Throughout the past decade, this “democratization of credit” has made small loans available to mass sectors of the population, and particularly the poor, that would not have had access to credit of any kind in the past. But the key difference now is that consumers across the board are attracted to the benefits of this type of loan.