Availability of Payday Loans After Credit Crunch

Cash advance loans are normally for amounts which do not exceed your monthly paycheck and are normally for amounts less than $5,000. The paperwork required for cash advance loans is centered around your ability to pay back your loan when the coming month’s paycheck becomes available to you. Some lenders will even have a facility set up that will automatically debit your account of the loan amount for settlement.

The risks to the lenders for cash advance or payday loans are actually very small. Lenders (even in normal times) will almost never lend to applicants who don’t have a permanent job or are in an industry that has a high worker turn-around number of a industry that has higher than average risk of redundancy. The higher rates payable on the cash advance loans is mainly because of the short period that the loan is used and the smaller loan amounts. Transaction fees and administration fees have to be factored in thus leading to the higher rates for the loans.

Remembering that cash advance and payday loans are generally low risk loans to the lender, a tightening up of the credit markets will not affect the loans availability to the end-user especially if the amounts is so small compared to other multi-million dollar loans that a lender might offer.

It is vitally important then to realize that the supply of cash advance loans from lenders is only marginally affected by this whole credit crisis. Smaller lenders who offer purely personal or cash advance loans would have very limited exposure to the problems in the credit markets. Only larger institutional loans providers like brick and mortar banks that offer many other financial instruments and loans will see the harsh side of the credit crunch.

Many cash advance loan companies will use the credit crunch as an excuse to raise their already high rates on you. If you start to negotiate they will often say that most other firms have already tightened up their belts and will not even consider a loan to you. This is simply a lie. The cash advance market is well and truly alive with almost all lenders still offering the same rates and availability as before the credit crunch. If you feel that your rates might be too high then you absolutely must look around for better rates. Never fall prey to their using the credit crunch as a valid reason to charge you more for your cash advance loan.

For the end-user, looking for a payday or cash advance loan now should be no different than before the credit crunch took affect. Other loans which have higher intrinsic risks attached to the product will be adversely affected by the credit crunch. Loan products like car loans, personal loan, home loans etc will have their credit requirements increased substantially and thus their rates skyrocket for those who can even be considered.