A payroll advance is defined as a short term loan and it is a type of small loan which is usually offered by the bank and it includes a facility of check cashing facility. There are many other names for this type of transaction which includes such as cash advances, payday loan and check book loan.
The most of them are operated in the same way as payroll advance. it is a short term loan which is given for a short period of time with a high interest rates and there are limited lenders available. State laws regulate payroll advance lenders. As of publication, Arizona, Arkansas, Georgia, North Carolina and the District of Columbia prohibit payroll advances.
Here are some tips for Payroll Advance
In order to conveniently access the Payroll Advance it is imperative that you know the features of the payroll advance and the fees plus the interest rates on it, both of which are described below:
Common Characteristics of payroll advance
Most payroll advances are off relatively small amounts in which limited number of dollars is given to you with high interest rates. According to the Consumer Financial Protection Bureau, the maximum loan is usually no more than about $500.
Although most come due on your next payday, some can be paid back in monthly installments. Regardless of when the loan is due, lenders usually require that you either write a post-dated check for the full amount due or provide your bank account information and authorize an electronic debit payment on the due date but the problem is that they charge high interest rates for short term loan.
Fees and Interest Rates of payroll advance
The most important part in Lending Act requires that payroll advance lenders disclose the finance charge and annual percentage rate in writing before you sign for and accept the loan. Make sure you check the rules and regulation.
State-regulated finance charges range from $10 to $30 for every $100 you borrow, which makes these potentially very expensive. For example, the APR on a two-week $100 payroll advance with a $15 finance charge is 391 percent.