Cash Advance Laws To Be Aware Of

If you are interested in getting a bit of money quickly, then one of your options is to get a cash advance. However, cash advances can be pretty strictly regulated in certain states, which might make them more or less attractive to you. To help you decide whether a cash advance is right for you, here are some of the restrictions that states place on cash advances.

Flat Restrictions

First of all, you have the states that restrict cash advances to a flat amount. This tends to be around $500, and is often enough to cover your basic needs, like food and medical expenses. If you need to borrow more than the cap in your state, then other lending options will be necessary.

Flat caps benefit individuals with low monthly income the most, since it allows them to borrow more than a percentage-based cap. However, it also hinders individuals with a high monthly income, since the flat cap is likely much lower than a percentage-based cap in their cases.

Percentage of Income Restrictions

On the other hand, some states restrict the amount of money that you can take relative to your monthly income. This is generally around 25%, which means that if you make $1,000 a month, you can only take out a maximum cash advance of $250.

From the same reasoning listed above, percentage caps are good for individuals with high income and bad for individuals with low income.

Combination Restrictions

Some states actually apply both percentage and flat caps, which means that your options are drastically limited. The lesser limit is applied, which effectively means that low income lenders are limited to around 25% of their income and high income lenders are limited to a flat fee.

Time Limit Restrictions

Many states also limit the maximum length of a cash advance, which means that you will need to repay your loan fairly quickly. Your state might limit you to half a month, one month, or even two months, but it is imperative that you pay your cash advance back by the due date. If you do not, then you could experience some very high interest rates.

Total Restrictions

Some states ban cash advances completely, which means that you will need to seek out an alternative means of getting the money that you need—personal loans are a good option for many people. It is crucial that you figure out your state's laws before you seek out a cash advance. By knowing the laws of your state and your rights, you can avoid lending institutions that are operating outside the law.