What Price is Paid for Fast Payday Loans?

Cash advance loans offer unique opportunities for borrowers to latch on to quick cash in a crunch. However, cash advance loans can be quite expensive. If you borrow $400 in a payday advance with a $60 processing fee (typical for the industry), your estimated APR -- assuming that you have to pay back the loan within two weeks -- is nearly 400%.

Although this extrapolated APR is good relative to the extrapolated APRs of the bounced checks, late bill fees, and reconnect fees which borrowers otherwise would have to pay with a source of quick cash -- let there be know mistake: cash advance loans can damage your pocketbook.

That said, some cash advance loans are more expensive than others. Don't just look at the fee for the use of the loan -- look at the term of the loan, the rollover period, the refinance recharges (if applicable), and the reputation of the lender. While the cash advance loans industry suffers from an image problem, the vast majority of vendors out there boast decent reputations.

If you opt for so-called faxless online cash advance loans -- lending opportunities which don't require much in the way of paperwork (not even a stub demonstrating that you earn a minimum of $1,000 a month) -- lenders often charge premiums for faxless approval. If you have the wherewithal to provide proof of income and a little more basic paperwork, you may be able to afford cash advance loans with slightly better terms.

Of course, the key to preventing your emergency financing tools from becoming burdens is paying back your loans as soon as possible. Even if you have other creditors hounding you for money, be sure to pay off your cash advance loans before they roll over. In addition, start up a savings plan or at the very least an emergency fund to provide a pool of cash in the event of a future crisis.

Lastly, always take out the minimum amount of money that you need to do your emergency business. The more cash you withdraw from your payday lender, the higher your rollover fees and lender fees will be. Look for cash from other sources -- an advance from an employer, a gift from a family member, or a more long-term, less expensive loan proposition -- to cover your needs after you've taken care of your red flag expenses.