Paypal Working Capital

[So Cal Joe]

I’m considering a Cash purchase of an item from an individual. It a time sensitive issue, because it’s a real good deal. Unfortunately I’m a little short and I am considering my options.

None of them are good, even on the short term. I’ve never done a cash advance and now I know why. 5% up front and a 25.5% interest rate. Even if it gets paid off in a matter of days, the APR is over 60% and will gradually work it’s way down to the 25.5% over time.

Ebay working capitol certainly has it’s advantages, instant approval, instant access to the funds, no credit check or reporting and payments are deducted automatically. However, in my situation, it still works out to 18 to 20%, regardless of the repayment terms. I can see why they offer this product so aggressively. It’s a real gold mine with minimal risk for them.

Don’t misunderstand me, my credit is excellent, I’m just in a cash crunch for something I probably shouldn’t buy in the first place.

Any other ideas for funding.. or should I just be smart and let the deal go..

[Jay]

No one is going to loan you money for cheap. We like Working Capitol because its a single fee vs regular interest. And it’s nice it comes out of future sales.

The bigger question is if you really need this item. If it makes sense to buy the item with the added borrowing fee, then Working Capitol is a nice option since its instant.

[So Cal Joe]

I agree with you, there are many advantages.

I’m going to have to look at it again. I automatically convert the fees to an interest rate, so that I can make sure I’m comparing Apples to Apples. In this case I think I Goofed on the math and the rate.

It may be the answer to my situation after all…

will advise..

[So Cal Joe]

I was right.. I goofed. For the amount of money I’m considering the interest works out to be 13.5% to 14%..

It’s not horrible, when you consider it’s instant etc. and since it’s short term, the dollar amount stays low. Realistically, I don’t think I can do better for this type of unsecured loan..

[So Cal Joe]

13.5% to 14% is the APR, not the actual interest paid, because I have no intention of borrowing the money for the full year.

Actual Interest paid for the 3 months will be less than 3.5%…

[Retro Treasures WV]

I went through the motions just to see what they’d offer me. Basically they’ll give me $3k and I’ll pay $500-600 in fees on that. It’s nice to keep that in my back pocket as an option, but I don’t see myself using it any time soon.

I’d rather save up a cash reserve to use and loan to myself. I did that to buy my truck recently.

[So Cal Joe]

It all depends on the length of the loan and the amount borrowed. They offered me a lot more than I’m borrowing… But I agree.. cash is generally the best way to go…

[So Cal Joe]

Update.. I borrowed $1000 on 7/31. It was available immediately and in my bank account the next day. I chose the highest payback rate at 30%.

Paypal predicted a time to payoff of 2 months or less. As of today it is paid off (about 45 days). The total fee (interest) charged upfront was $23.

For me it was more like a cash advance than a loan.

For my particular situation, it was clearly the best option to fund my venture. Due to the timing of the purchase, I didn’t have the luxury of time to obtain the money through more traditional means.

Ideally self funding is the way to go. There’s nothing like borrowing from the bank of ME. However, for a short cash flow situation, Paypal Working Capitol is worth looking into.

Thanks

[Roland Deschain]

I occasionally use a credit card that has a balance of $0, That way I can pay the balance off before the end of the month. I only do it in situations where the item is as close to a “sure thing” as it can get and if it will sell fast. Assuming I dont have the cash at the moment.

[So Cal Joe]

Unfortunately, I needed cash to make this purchase, so the credit card was not a good option.

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