Sometimes, unplanned expenses crop up – like an emergency or one of those months when your budget isn’t enough, and you need extra cash to pay your bills. Cash advance loans offer you access to money quickly and are reasonably easy to obtain.
What Are Cash Advance Loans
Your bank or credit card issuer offers a short-term cash advance loan. If you need money quickly and would like to take out a cash advance loan, you have two options available.:
- Payday Cash Advance Loan
- Credit Card Cash Advance
Payday Cash Advance Loan
To qualify for this loan, you need to be eighteen or older, and you must have a bank account, phone number, and identification document. You’ll also have to show that you have a steady income.
The easiest way to acquire a personal loan is to check with an online lender. Creditninja.com online cash advance loans are also available if you still haven’t found a legit lender in your area.
With online lenders, the approval process is simple, and they usually don’t check borrowers’ credit scores. Once approved, the money is either given to you in cash or transferred to your bank account. The borrower will need to write a post-dated check or give the lender permission to electronically withdraw from or debit their account in the future for the amount they borrowed.
The payday cash advance must typically be paid back within two weeks to a month after the loan was made or on the borrower’s next paycheck. These loan types are paid back in a lump sum rather than monthly installments.
Credit Card Cash Advance
A more popular cash advance is the credit card cash advance. It’s easy and convenient since most people already have credit cards. This method involves using your credit card or existing line of credit to access cash.
You can either go to the ATM and withdraw the cash or go to your bank and request cash using your credit card. Before withdrawing money from an ATM, you will need to set up a pin code on your credit card, which you can do with the credit card issuer.
Another option is to use your online banking app and transfer the money from your credit card to your bank account. Your cash withdrawal limit on your credit card is usually lower than your swiping limit.
The credit card cash advance has a separate balance, but you may be able to pay it off monthly, the way you would your regular credit card balance.
Advantages and Disadvantages of Cash Advance Loans
Before you access and use money from a cash advance loan, it’s crucial to understand all the details, including the advantages and disadvantages of what this loan type entails. This way, you won’t be left with a nasty surprise once the money is spent.
Advantages
- Fast access to cash
- Convenient
- No collateral
- You don’t need a good credit score
A cash advance loan is a great solution when you have an emergency and need cash fast. There is very little or no paperwork, and the approval process is almost immediate.
Cash advance loans are convenient, primarily if you use the credit card option. Once your credit card pin is set, you don’t have to wait for banks to open. You can go to any ATM compatible with your credit card and withdraw the money you require at any time, whether it’s the day or night.
This loan type is unsecured, so you don’t need any collateral. It’s especially useful when you don’t have any assets to use as collateral.
If you don’t have a good credit score, you will still be eligible for a cash advance loan. Also, this loan type does not affect your credit rating.
Disadvantages
- High-interest rates
- Additional fees
- Extremely short-term
- No grace period
- Borrowing limits are low
As the saying goes – nothing is free, so while a cash advance loan offers fast and easy access to cash, it comes at a cost in the form of extremely high-interest rates and additional fees.
Over and above high-interest rates, you will also need to pay fees that include an APR fee, cash advance fee, and ATM or bank fee.
Cash advance loans are incredibly short-term, meaning you don’t have a long time to pay them off. Depending on the loan terms, you would need to pay the money back within two weeks to a month or your next paycheck.
There isn’t a grace period for cash advance loans, and you are charged interest as soon as you access the money.
A cash advance loan is not an option if you require a substantial sum of money. Both the payday cash advance loan and the credit card option offer low amounts that you can borrow. Even if you have a high credit card limit, the amount you can withdraw as cash is significantly lower.
References
- Cnbc: What is a Cash Advance and How do They Work?
- Loanscanada: What is a Cash Advance?
- Rockethq: What is a Cash Advance?
- Forbes: What is a Cash Advance and Should You Get One?
- Traveldailynews: Advantages and disadvantages of cash advance online same day with bad credit
- Investopedia: Cash Advance