Outlining the Costs of an Overnight Cash Advance

An overnight cash advance may solve your financial crisis in the short-term, but it will end up creating a larger expense in the long-term. This immediate form of financing uses every means necessary to take high fees out of a borrower and put them in the hands of a lender.

Lack of Time to Negotiate

Lenders know when a client is not willing to negotiate. If you seek an overnight loan, you are telling the lender you have little to no other options at your disposal. You have basically let the lender know you will take whatever offer the lender chooses to make. This puts you at risk of vulnerability to terms and fees you would not otherwise be subject to if you could seek multiple options.

Rapid Advance Fees

One of the ways a lender will capitalize on your attitude is by charging fees for the rapid advance. There may be a service charge to process the loan overnight. In reality, it does not cost the lender any more money to process your loan quickly. However, the lender knows you lack the option to simply say no and walk away. The lender will exact fees from you wherever possible, and capitalizing on your rushed attitude is one of the ways it can profit.

Upfront Costs

Most financial advisers warn against paying up front fees to work with a lender. These fees are not closing costs or origination fees, which are standard on even quality loans. Instead, these are fees the lender charges simply to consider doing business with you. They may be called convenience fees, or they may be disguised as a "membership" fee to join a credit union or loan organization. No matter what the charges are called, they are never necessary and do not result in real benefits to you. The lender uses this tactic so you have already spent money with them and are less likely to walk away from a final loan quote.

High Interest Rates

Cash advances are a form of high risk loan. They are high risk because the lenders tend to have lower credit standards for borrowers. This means you will be able to get the loan even if you are not qualified for other standard loan options. To make up for the risk associated with the loan, the lender will exact very high interest rates. You will find much lower rates if you seek a traditional loan through a bank.

Additional Financing Penalties

Cash advance lenders love to use penalties to take more money from you on the back end of the loan. For example, if your check is even a day late, the lender may assume a high penalty against your loan. The lender may even require the amount be paid in full, in cash on the day it is due. This sets up a situation where, if anything goes wrong, you could end up owing twice as much as a result of missing your initial payment date. It is best to avoid this scenario by simply avoiding cash advances to begin with.

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