What is a Check Advance?

A check advance refers to a small, short-term loan that is offered by numerous lending companies. The amount of a check advance varies from company to company, and borrower to borrower, but they do not normally exceed $500, though in some cases they will. The name "check advance" comes from the manner in which this type of loan functions. The company usually has the borrower give them a check to cover the sum of the loan as well as any financial and interest fees that they charge. The check is held by the company until the borrower's next payday, at which time the cash advance on the check is due.

What Kind of Charges Does a Check Advance Incur?

The charges on a check advance vary from company to company. While some lenders may not have high fees for using a check advance, the APR or interest rates on this type of loan are always high. Due to the high interest rates involved with any cash advance you should be certain to follow these two guidelines:

1. Make sure you know what kind of rates and fees the lender has for a check advance. It is important to know how much you will be expected to pay, not only as an initial fee, but any additional fees, should you not be able to repay the entire sum on the first date it is due.

2. Avoid the first problem by borrowing no more on a check advance than you can reasonably repay with your next paycheck. Remember to take into account how much you will need to get through to the payday after that.

How Can I Find the Right Check Advance?

You will find the right check advance for your needs by doing your financial homework. These are short-term loans only, and it won't be much help to you in the long run if you pay back only the interest each time, without paying off at least a large piece of the loan. Know how much you need, and if you truly need a check advance, then find out what you will actually have to pay, including APR and all fees involved.

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