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Weighing the Pros, Cons and ROI on Cash Advance Loans

Last updated 2012.03.30


The economics of environmentalism is usually pretty clear to most of us with the eco-mindset. You know that if winterize your home, you will see a dollar savings in energy that reaches an ROI in a few years, then continues to provide a savings on your homeís fuel bill for years to come. Along the way you appreciate the sense that youíve reduced your carbon footprint.

Itís frustrating to talk to people who donít get that. They get hung up on concepts (fed to them, perhaps, but the industries that profit most from fossil fuel consumption) of cost-benefits in a yearís time only. They donít seem to have a grasp on the long-term benefits that you receive and benefits to the broader environment.

Similar confusion and misperception can happen around payday loans. Perceived by some to be a desperation measure, critics of cash advance services fail to recognize where payday loans can be cost effective under some circumstances.

The key is to examine the individual using a payday loan and the reasons he or she takes out their cash advance, on a case-by-case basis. Here are scenarios where this form of alternative borrowing can make sense:

  • Tight finances, emergency expenses Ė The individual or family who lost one or more sources of income generally navigate difficult times. For example, when a car that is necessary for work breaks down and the repair work is $500 or more, they must pay for it or lose their ability to work.

  • Need to hit a bill due-date Ė Everyone understands how a credit score is determined by paying bills on time. If a cash advance payday loan prevents a drop in your credit score, it could mean thousands of dollars in savings on future loans.

  • Timely purchase Ė If you want to winterize your home in October, you need to make purchases then, not January after getting a holiday bonus check. The timing of money needs is sometimes hard to predict, but with the flexibility of payday loans you can manage it better.

    Terms of any cash advance loan company should be taken into careful consideration, of course. A strategic approach looks at the costs of the loan against how the loan helps save money over time, and you should shop around to find the best deal, which might be something other than a payday loan such as setting up a line of credit with a credit union.

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