Paycheck advance apps are growing in popularity as an alternative to other expensive short-term sources of financing like payday loans. The most popular sites for borrowers who want to take out small-dollar payday advances are Albert, Earnin, Dave, Chime, Money Lion, and Upstart.
Of course, not all cash advance sites are created the same. That’s why it is crucial to take some time to do your own research. But equally important is to know the comparison-shopping factors that make a payday advance app. Here is everything you should look for while comparing one app to another.
Essential Payday Advance App Checklist
While payday advance apps may help you achieve the same goal, they function quite differently. Here is an essential checklist of things to consider while you are comparison shopping for a paycheck advance app.
Fees
Most of these applications generally don’t charge any adjustable or fixed-rate interest to take out a payday advance. Instead, some of them will request customers to tip them for use of their services. Other sites request a monthly subscription fee to help them with transactions. Both tips and monthly subscriptions are often optional and relatively low (between $1 and $10), depending on how many features users access.
Interest Rates
Like with any other source of financing, you also need to pay attention to the additional costs of borrowing. While asking for a tip for the application is fair, it is crucial to remember that a loan’s average interest rate should be a maximum of about 36% under the Military Lending Act. For example, that would be a total of around $4 on a $300 loan, which is not even close to the $10 average recommended tip. The latter would clock in at an APR of 135%, not counting any monthly subscription charges and other costs.
Dollar Amount
On average, the dollar amount is determined by state restrictions and apps themselves and is somewhere between $50 and $500 https://www.instantcashtime.com/bad-credit-loans-guaranteed-approval/ . Some websites, like Earnin, require their members to begin with much smaller advances to prove they are worth the potential risk. Over time as you pay these debts back on time and in full, your borrowing limit will increase.
Deposit Time
Since most of the applications have money in reserve, they can send it to borrowers within a few minutes. That said, some websites may take longer to process applications – typically one business day or two (or longer). It is also the case for them to allow you to bypass that time faster if you are paying an additional rush fee.
Conditions
Payday advance apps are usually easy to access. For the most part, consumers must pass the base legal age (18 years old or older) and be United States citizens. Minimum eligibility conditions vary from one app to another. Some might require you to have a certain credit score to qualify or a few direct deposits from the same company.
Reviews
As Maya Angelou once said, the first time people show you who they are, believe them. This quote is about perception, but it can be applied in your process of finding a good payday advance app, too. Always check out an app’s reputation. Pay attention to how other customers refer to this website, look for complaints with the forums, as well as in your app market.
Payday Loans vs. Advance Apps: Which is Better?
Payday loans and advance sites are similar in a number of things, as follows below:
- Both are short-term sources of financing created to help you pay off a personal cost quickly.
- Both are small-dollar financial options, though payday loans can reach a higher limit of $1,000.
- Both must be paid off in one sum with the next payroll (typically two or four weeks).
That said, there are many reasons that payday advance apps are better than payday loans. Applications come with lower interest rates that are limited to 36% in principal. They also don’t require any lender fees, penalties for missed payments, and other hidden costs of borrowing like their payday counterparts. They are easier to access. Their repayment terms are flexible.
It is still possible to get trapped in a cycle of debt with payday advance applications. But they are usually more customer-oriented and do not have the tribal practices as other short-term sources.
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