Cash Advance Loans
Cash advance loans are designed to help you in emergency situations. These loans are versatile and can be used for many different reasons, such as unexpected medical or vet bills, emergency home repair, in case your car breaks down, and so on.
Cash advance loans are straightforward and aim to provide extra cash to help you before your next paycheck. By taking out a cash advance loan, you will get back on your feet, and improve your financial situation with ease.
But what happens when you need the money urgently, and you have a low credit score? Well, the options narrow down a bit, and borrowing may be more expensive, as the investment is considered less secure for the lender. Still, there are solutions available for such scenarios, and one possibility is the so-called “bad credit loan.”
What Is a Cash Advance?
The term “cash advance” can be used to describe a couple of methods of short-term borrowing that have a mutual purpose – quick money in times of need.
There are three types of cash advances: cash advance loans, credit card cash advances, and employer cash advances. In contrast to the other two cash advances, employer cash advances don’t fully qualify as loans.
An employer cash advance technically is borrowed money, but it doesn’t need to be returned. The reason is simple: you’re borrowing from your own paycheck; the money is just given to you by your employer sooner than you would usually get paid.
Generally speaking, cash advance loans are intended to provide you with assets to tackle sudden or urgent expenses immediately, before your next paycheck arrives.
Cash Advance Loan vs. Credit Card Cash Advance
To apply for a cash advance, you would simply need to write a check dated for the day your next paycheck will arrive, and then apply with an online or storefront lender.
The amount you put down on the check is the amount you want to borrow, with the addition of the lender’s fees and interest. After that, you would get the money in cash or transferred to your account to spend it however you wish.
As long as you know that your next paycheck will cover its price, a cash advance could be an excellent way to take care of an unplanned expense without making a long-term commitment.
The process of getting a credit card cash advance is similar to how you’d normally use a credit card and withdraw money from an ATM. You simply insert the card, choose the amount you want to withdraw, and claim your money.
One of the main differences when it comes to a cash advance is that, unlike with a debit card, you’re not actually withdrawing any of your own money – you’re borrowing a sum that you’re expected to repay.
It’s important to note that cash advances come without the grace periods that debit card usually have. The interest starts accumulating immediately, just like with many other loans.
On average, the APR (annual percentage rate) for your credit card will hover around 16%, whereas some cash advance loans bump that number up as high as 24%.
However, this number isn’t alarming when you remember that cash advances are supposed to be returned fully with your next paycheck.
Think of it this way: for every $100 you borrow, you will typically need to pay about $5-15 extra to a lender, and even less for a credit card cash advance.
If you approach these loans carefully, taking a cash advance loan can be both time and cost-effective, letting you handle surprise expenses while maintaining your financial stability.
How to Stay Safe When Taking out a Cash Advance Loan
As with making any other impactful decision in your life, the process of taking a loan should be approached with caution. Here are some steps to ensure everything runs smoothly:
- Assess your financial situation.
- Your credit can determine how eligible you are for various loans. But more important than that, your financial reality will decide which expenses you will be able to handle in the future.
- Consider the term of the loan, the cost, and method of paying it back, the interest rates, and the extra fees that might come up.
- Before opting for a loan, you should be confident that you will be able to comfortably pay it back in time.
- If possible, lower your regular expenses.
- Can you try cutting out some expenses? Are you already budgeting? Is there another, less urgent project you were saving money for that could stand to wait a while?
- Even if you can decrease the amount you borrow by a little, it can make a big difference overall.
- Do your research.
- List all your options and see which one makes the most sense for your unique situation in the long run. Lenders have distinct conditions and offers, so taking the same type of loan may come with different benefits and risks according to them.
- Ask questions and demand transparency.
- Lenders who are patient and upfront about what they offer are the ones you want to borrow from. To take an extra measure and ensure a good deal, you can always contact a professional and have them guide you through the process.
Still have some unanswered questions? Reach out to us at CreditNinja and we’ll be sure to get back to you shortly.
We offer a variety of loans including cash advances – you can apply today, and if you are approved, your funds will be deposited into your checking account the next business day after being approved.