If you want a cash advance or payday / paycheck loan, The lender will usually receive a personal check. Some companies use your bank account or credit card, in addition to or instead of a check. This means that you have to write a check to be charged or should agree to have an amount withdrawn from your bank account on a given date in the future (usually 14 days). After filling-in the agreement or contract to which a sum of money that is less than what they have agreed to pay. The sum is smaller because the difference is the “quota” for the loan service.
Why loan the company money like this? Due to lend money in this way and getting these “fees” really brings a huge profit at their expense. If we assume that you borrow $ 200 and the “fee” is $ 15 per $ 100, within 14 days will have to repay $ 230 to $ 200 that you borrow. If loans from $ 200 to avoid paying a $ 100 fine or punishment for something, then it’s worth the effort. But if you just need the money for himself, the price is too high. Simple math shows that you are paying interest of 15% for a 14-day loan. That means $ 3,785 per year compound interest. So now you can understand why lenders are very happy to give you money.
If you borrow $ 100 and you pay back $ 15 more in just two weeks and the loan of $ 100 again along with the $ 15 I received from you, doing this for a year, which in turn, their $ 100 at $ 3,785. This is the proof he needed that is better for them to borrow money to them.