700 Cash Advance
A 700 cash advance is a type of short-term loan that provides borrowers with a small amount of money, typically between $700 and $7,000, to help them cover unexpected expenses or financial obligations.
Regulation and Lax Laws
The lack of effective regulation and lax laws have contributed to the proliferation of 700 cash advance lenders that prey on vulnerable consumers.
- In many states, payday lenders are allowed to charge exorbitant interest rates and fees without adequate oversight or regulation.
- Some states have implemented legislation aimed at curbing the industry's predatory practices, such as banning high-interest loans or capping APRs.
Key Concepts
A 700 cash advance typically involves a loan with one of the following characteristics:
- Fixed interest rate: A fixed interest rate is charged on the outstanding balance, often expressed as an annual percentage rate (APR).
- Rolling fees: Some lenders charge rolling fees that accrue daily or weekly, depending on the borrower's payment schedule.
Rolling Fees vs. Fixed Interest Rates
Some critics argue that fixed interest rates are less predatory than rolling fees, which can trap borrowers in a cycle of debt.
- A study by the Center for Responsible Lending found that payday lenders who charge rolling fees tend to have higher APRs and shorter repayment periods than those who use fixed interest rates.
Technical Details
The following statistics provide insight into the characteristics of 700 cash advances:
- Average loan amount: $1,200 (according to a report by the Consumer Financial Protection Bureau)
- Average APR: 390% (according to a report by the Center for Responsible Lending)
- Average fees: $30-50 per $100 borrowed (according to a study by the National Bureau of Economic Research)
Debt Cycle Statistics
The debt cycle statistics highlight the risks associated with 700 cash advances:
- 71% of payday borrowers default on their loans (according to a report by the Consumer Financial Protection Bureau)
- 34% of payday borrowers end up taking out multiple loans within a short period (according to a study by the National Bureau of Economic Research)
Applications/Uses
700 cash advances are often used for unexpected expenses, financial obligations, or to cover temporary income gaps:
- Cars repairs: A common use for 700 cash advances is to cover car repair costs.
- Medical bills: Some borrowers may turn to 700 cash advances to pay medical bills.
However, critics argue that the industry's reliance on high-interest loans perpetuates a cycle of debt and can exacerbate financial insecurity.
Impact/Significance
The impact and significance of 700 cash advances are multifaceted:
- Financial instability: The proliferation of 700 cash advances contributes to financial instability among vulnerable populations.
- Economic inequality: Critics argue that the industry's predatory practices exacerbate economic inequality by preying on those who can least afford it.
Criticisms and Controversies
The 700 cash advance industry has faced numerous criticisms and controversies over the years:
- Predatory lending: Critics argue that the industry's practices are predatory and take advantage of vulnerable consumers.
- Lack of regulation: The lack of effective regulation has allowed lenders to continue operating with minimal oversight.
Related Topics
The following related topics provide insight into the broader context surrounding 700 cash advances:
- Payday lending: Payday lending is a related industry that provides short-term loans with high interest rates and fees.
- Financial inclusion: Critics argue that the 700 cash advance industry undermines financial inclusion by preying on vulnerable populations.
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