One of the most important lessons that the government shutdown of 2018-2019 left, was the fact that almost four in five Americans are living paycheck to paycheck. This is an alarming rate for a so-called booming economy, and it also provides a deeper context about the current health of the insights in the overall economy.
Considering that almost 80% of Americans are stretching thin every month just to make ends meet, it shows how fragile the majority of the population actually is. Once you add all the fluctuations and uncertainty about life, the fact that things break and that people get sick, it opens discussions about how much Americans truly depends on short term borrowing to overcome certain situations that can emerge at any time.
Pay Day Advance provides an alternative to traditional models of lending where an individual can borrow they next paycheck, in other words, get a salary advancement to cover a rising necessity. Maybe it is not even an emerging necessity, chances are your electricity bill arrives the twelve-day of every month and you don’t get paid until the fifteenth. By getting a payday advance you can secure your payments without incurring in penalties or high fees.
Due to the high demand for this type of products, many firms have even gone through all the hassle of negotiating with major employers in order to make their products available in the house. Take into consideration that the overall payday loan and payday advancement markets have evolved over the past decades, changing into a more structured and regulated sector of the financial market.
If you are thinking of using a payday advance provider, you should take your time and review all available options before making a choice. While this is a market that is highly regulated, you can still come across with firms who are operating in grey areas of the law or that simply aren’t regulated at all. Even if it means paying a little bit more, this is one of those moments where you want to take the safe option rather than the cheapest one.
Should you use a Pay Day Advance Service?
A paycheck advancement can be one if not the best way to overcome an unexpected expense without requiring a higher level of debt or compromise with a financial institution. The main reason why they can be so great is that depending on the size certain firms will even offer these advances free of charge and free of interest rates.
Just like with any type of borrowing vehicle it might not be right for you, it is important to properly understand what your needs are at the moment and also to clearly understand your financial situation before making any choices. Even with all the problematics of a sector that was stained in the past with negative press, it is higher recommended to take your time to review all the many options before making any final choices. This is a very broad market and if you take your time to review it you can come across with great options.
- Fast Funding: One of the key elements of a payday advance is the fact that funding is extremely fast, allowing individuals to fulfill their necessities and to complete their payments on time. Depending on the platform or the provider utilized for the loan the money borrowed or advanced can be deposited almost immediately.
- No Credit Score Required: It is definitely not the rule, but it is important to keep in mind that if you have a damaged credit score, you will still be able to utilize most of this type of services. Depending on your credit score and your financial situation, a payday advance might be the best way to get fast cash without exposing to a fraudulent model or a sketchy lender.
- Amount Flexibility: Maybe you just need an extra $100 to pay for a car fix, or simply pay some medicines needed. Whatever your necessities might be it is great to know that you will be able to tailor the amount request right to your needs. It is important to keep in mind that other borrowing options will force you to borrow an x minimum, subsequently making you pay more in terms of interest rates and fees. With a payday advancement, you will be able to borrow anywhere from $50 up t0 $1000 and depending on your salary even more.
***Note: One if not the best aspect about payday advancements is the fact that major employers are partnering with some of the firms behind this borrowing product. The result of this venture is a smoother and more transparent business model where payroll is connected directly with their services, allowing payments and transactions to run with ease. Chances are that if you are working for a relatively large firm, it might already have partnered with a payday advancement firm.
- High-Interest Rates: Unless you are borrowing from your family or a friend, it is very unlikely that you will be able to borrow at no cost. Any financial institution or firm that is lending money is in the business of making money in return. Due to the high risk of lending to individuals with a bad credit score or simply due to the short period of time, most firms will charge high-interest rates for these types of loans. It is important that you understand clearly how much money you are being charged and also if you truly have the capacity to pay for the loan. Defaulting on this type of loans, in particular, can snowball into pretty complicated situations.
- Vicious Debt Cycle: Let say you borrow $100 to pay for the repair of your car, you know that you need to start saving money for you to be able to pay the loan back with your next paycheck. A month goes by it’s time to pay and you did not save anything, now you pay the loan back but you are $100 short to cover the rest of your payments for the months. It is incredibly easy how an individual can put themselves in such a repetitive story, the main problem is that every time the loan is pushed forward fees are being charged and interest rates are compounding against you.
- Hard Collection Methods: Collection agencies are by definition the most hated department of the whole lending market, it is not a pretty job but it needs to be done. The problem with this specific area is the fact that some of these firms used to take advantage of weak contracts and their lack of transparency to take advantage of their customers. This is a point where the overall market has improved in the past years, but in certain scenarios, it can still be a problem.
Top Pay Day Advance Providers
1. CashNetUSA | Most Convenient Option
CashNetUSA is a financial institution that focuses on offering short term borrowing vehicles in the US. The firm has become one of the influential names in the sector, and over more than a decade, it has been the example for many other platforms.
One of the key elements of this firm is how easy and straightforward the overall process is, you need to keep in mind that not so long ago payday loans used to be considered dangerous because of all the shark lenders in the market. Seen a firm being so transparent and highly regulated proves how much the entire sector has advanced.
While this firm offers and markets payday advancements, the firm offers its own approach by offering short term loans as advancements. A credit score will not be a showstopper, instead, the firm focuses on proving a stable source of income (this will be used to determine the max amount to borrow).
Keep in mind that this is a firm that follows state and federal laws to the letter, this means that guidelines and rules might differ from state to state.
APR: Variable: 200% to 800% (Based on Credit Score)
Loan Amount: $100 to $1000
2. Earnin | Cheapest and Best Option in 2019
Many failed to categorize “Earnin” properly, and the main reason for this is that it is a completely new model that is truly disrupting the market. It is not a PayDay platform, and it is not a P2P model, instead the firm acts as a community oriented firm that offers products with the true intention of helping the community get to a better financial position.
The app allows individuals to cash out their gains on a daily basis, in other words, it permits employed individuals to gain access to their money as it is earned instead of having to wait for their wages to be paid on a traditional calendar.
The most amazing fact about the firm is how customer-focused they really are! This is a company that will allow you to pay based on your conscience, maybe you can’t pay a full fee right now, don’t worry it will be zero this time. It really allows individuals to pay based completely on their situation, this opens a whole new dynamic where individuals in a better position can technically take care of the community by advancing payments or simply deciding to pay more.
Thir platform permits to cashout upto $100 per day.
APR: No Interest Rate
Loan Amount: $100 a day | $500 pay period
Length: Monthly if wanted, there is no restriction
3. Brigit | Best App to Avoild Overdrafts
Brigit is an app that works diretly with your bank account, it determines and forecast your expenses in order to anticipate wether or nor you will be able to cover all your payments every month. Whenever the answer to this question is negative, the firm that automatically lend you in order to cover for your expenses and then get paid in full once your next check comes in.
While it is a simple model, it has become the focus of attention of many firms inclusing traiditonal banks and large institutions who are interested in putting it to play.
It is important to keep in mind that while this is useful, the model has a very low borrowing limit of only $250 which might not be enough depending on the situation. Never the less if you are simply looking for an advanced option that is fairly cheap ($9.99) and that works without problems, it is worth considering Brigit as an option.
APR: No Interest Rate
Loan Amount: $10 – $250
Length: Monthly if wanted, there is no restriction
4. Dave | Best for Small Amounts (Fast and No Credit Check)
Dave is probably the most disruptive model from this list, not only it is a company that started their business as a payday loans operator but is even offering an online banking experience with checkings and savings accounts.
The model followed by Dave works as a forecaster, the platform basically analyses your spending habits and collects pieces of information about your bills and your monthly payments. This permits the platform to analyze and confirm if you are going to be underwater wit your payments and even the amount of money needed in order to overcome payment everything on time.
But not only does the app confirms the fact that you need money, but it also lends you! Dave is configured to allow borrowing with 0% interest every month for up to $100. This might sound like a small amount but once you considered that you are borrowing basically for free and the fact that you don’t even need a credit check, you can see how great it really is.
Take into consideration that if you are interested in borrowing a higher amount it might incur in other charges. On average the firm advertises that their users are saving upto $500 every year in traditional fees.
APR: No Interest Rate
Loan Amount: $100
Length: Monthly if wanted, there is no restriction
5. Money Lion | Alternative to Traditional Lenders
More than an app or a firm, money lion acts as a membership where their users are offered a variety of benefits as part of their plan. An important aspect to mention is the fact that the firm currently offers savings and checking accounts with visa debit cards with no fees associated to the account, something that not even traditional banks are willing to offer.
Money Lion currently offers two different membership status, the Core wich is free and the plus which is a$19.99 a month. It might sound like a lot for a banking membership but once you analyze what it might save you simply on fees it is definitely something to consider.
On an advancement perspective the company offers upto $250 every month on payday advancements, allowing individuals to get access to extra money almost immidieatly and with zero APR.
This is not a membership that is for everyone, but I personally believe it is worth considering as a top contender.
APR: No Interest Rate for advancements
Loan Amount: $20 a day to $1000
You might not be needing a paycheck advancement at this precise moment, but it is still good to know about the possibility of getting one if needed. Depending on the situation, the need of getting a loan might come from something completely out of the blue, and it is in this type of scenario where it is the most difficult to make rational choices and where many individuals will end up acting based on pressure and fear.
Knowing that your employer might be willing to advance your paycheck or that a third party firm is willing to do the same for you, acts as comfort that if things go south you will have an option almost in hand.
Financial institutions have been known for being hard on their clients, and it is for exact same reasons that many of the firms mentioned above are trying to change the view and the optics of them. As this market becomes more and more regulated, the business model of these firms has changed from a sketchy way to lend money to individuals in need, to a useful platform that is even connected to the payroll system of companies like Walmart.
It is a very broad market with a large offering of products and services, it is always recommended to review several options before committing to one. Just like with any type of borrowing vehicle, reviewing and choosing the right provider can be the difference from a headache or a pleasant experience down the road.
The vehicle itself is safe, the problematic rises from the incorrect use that many individuals give to this type of borrowing and at the same time to the fact that there are many sketchy firms on the street. The main problem with any type of “PayDay” vehicles was the fact that many companies used to take advantage of desperate individuals in order to charge them irrational interest rates and to churn them basically.
Nowadays the market has become a more regulated environment where borrowers are more protected, it is still important to review the due information of a provider before even considering them. There are still many firms operating in a grey area so it is better to be alert and stay with the ones that are regulated and that have a track record.
One of the main risks associated with Pay Day Advancements is the fact that you can easily run yourself into a debt spiral, where in order to achieve payments you will need to borrow every month. Not only this is not ideal but at some point you will find yourself in a position where you won’t be able to afford, putting an end to the whole scheme.
On the other hand, you need to consider the risk of falling into the hands of a nonregulated lender. Its been known about firms offering their services without a proper license and even doing so without a proper record of transactions and payments. Imagine dealing with a firm that is simply charging you fees without a proper reason and not having anyone to complain about it. This is a story that could turn as bad as borrowing money from the mob just like in the movies.
Depending on the scenario there are many different types of borrowing vehicles that can help and individual overcome a hard financial situation (or at least o ease it). If you have a damaged credit score the alternatives are usually reduced, but it is still possible to find borrowing options but at a higher cost.
One of the most used alternatives are P2P financial sites, these firms work as marketplaces where borrowers and lenders and meet and interact for financing. While they have a minimum credit score, it is a great option for anyone interested in a fast application process and also a quick disbursement of funds.
For more alternatives, I recommend reviewing our dedicated article of “Loans with No Credit Check“.
This is a market with a very large, complex and different offering that in most cases can vary based on pricing. It is important to take into account the fact that this type of vehicle can be very expensive depending on the provider.
As the market grows and more firms start offering their own products, the cost of borrowing through this type of vehicles will continue to fall, it is always recommended to review different options and alternatives before choosing one. You would be surprised by how much fees can vary from provider to provider.
It is important to mention that if your employer offers an in house plan, it might be the cheapest option.
Keep in mind that not all the providers will share information with credit bureaus and this is something that can play as a double sword depending on your scenario. While it can be beneficial not to share information at all, it can also help individuals who are interested in improving their scores via small borrowing.
It is important to understand that depending on the scenario certain models of payday advancements are not even considered as loans or even borrowing because of the fact that they are paid in full and also because money is being covered by already worked wages advanced directly by your employer.
Technically speaking the max amount that can be borrowed will depend from provider to provider and also from state to state. It is important that you check for the local statutes in your states and also with your desired provider in order to understand if there is or not a standing limit.
It is important to keep in mind that this specific model of borrowing vehicle is heavily guarded as it is mostly used by individuals in need, and as mentioned before its been common to see firms taking advantage in the past.