Wage Day Advances can be an extremely useful service for people who have a desperate need for fast cash to see them through until their next payday arrives. Whether this is down to a cashflow problem, or an unexpected expense, wage day advance loans can help span the gap.

Cash advance loans come at a price though – and it’s a significant one. Cash advance loans are widely regarded as one of the most high-priced forms of legitimate borrowing out there, with huge rates of 1000% or more routinely encountered. Why are the charges so high?

The first consideration to highlight is that wage day advance loans are taken up over a fairly short term, while the popular APR measure of interest charges is intended for measuring how much interest would be charged over a period of a year. As few wage advance loans are taken out for this long, APR numbers are perhaps not the safest way of assessing how expensive they are in the real world.

Nevertheless, the costs are substantial. You’re paying for convenience and speed, as most loans can be in your bank within a working day, and also because of the lack of credit scoring you’re also in a way paying for the chances taken by the loan issuer who may lend money to individuals entirely unable to pay it back.

You’re also paying a higher amount because the loan issuers know that individuals who need funds urgently are willing to pay more than those searching for longer term borrowing and are prepared to shop around for a less expensive deal.

It is this last reason that is the fundamental one cash advances are so costly – as an industry, payday loaners recognize that they are the last option available for borrowers, and so can afford as an industry to charge extreme prices for their undoubtedly popular services.