Cash advances have helped countless Americans escape tight financial situations. However, over the years, they have received criticism for fostering situations where people become dependent on cash advances and recover financially.
Here, let us understand what Cash Advances mean, their types, and why people opt for them.
What is Cash Advance?
Cash advance loans are short-term personal loans you can use when short on cash. They can be used to cover unexpected expenses or everyday bills.
When you get a cash advance, you get a lump sum you can use for whatever you want. Your credit card limit usually limits the amount you can borrow, and cash advances are typically associated with high-interest rates and fees.
Furthermore, cash advances frequently have a higher interest rate than regular credit card purchases and do not have a grace period, which means interest begins accruing immediately.
Types of Cash Advances:
“Cash Advance” can have different meanings in different contexts. Cash advances are classified into three types. They are as follows:
1. Payday loan cash advances:
The payday loan works precisely as the name suggests. In addition to high-interest rates, these loans frequently charge additional fees, so read the fine print before you borrow. The funds are automatic-challenging deducted from your account when your designated payday arrives.
2. Credit card cash advances:
Cash advances allow you to withdraw cash from an ATM using your credit card. Most credit card companies charge higher interest rates for these transactions than usual, and they may be excluded from any discounts or programs by your credit card company.
3. Installment loans:
As the name implies, installment loans are a type of cash advance in which the borrowed amount is repaid in installments over a set period. Auto loans, student loans, and mortgage loans are all examples of installment loans.
The borrower repays a portion of the loan and pays interest with each installment payment. Installment loans typically have lower interest rates and more flexible terms than other loan types.
Pros and Cons of Cash Advances:
|Provides quick access to unsecured funds—no collateral required||Extremely high APR and fees|
|Easy to get—no underwriting or credit check involved||No grace period—credit card cash advances begin accruing interest on day one
Why do people take Cash Advances?
1. Fast access to funds:
People who require quick cash turn to cash advances for assistance during emergencies. It is an excellent option when you require quick cash. Most cash advance lenders guarantee quick approval and the release of funds within 24 hours. Cash advance lenders are also available 24 hours a day, seven days a week. Compared to traditional loan options, which can take time to apply for and process.
2. Lesser requirements:
Another advantage that cash advance lenders provide to their customers is that they have fewer requirements than other loan options. If you apply for a cash advance loan, you only need to meet four simple requirements.
These are the requirements:
- You must be at least 18 years old
- Identity proof (a government-issued ID or SSN)
- You must have a consistent source of income (a regular job or a well-established business)
- Bank account that is active.
These requirements may not be challenging for you to obtain because you may already possess all of them before applying for a cash advance loan. It is best to prepare everything beforehand to ensure your application is processed quickly.
3. Inspected credit score not required:
Because the cash advance lender does not inquire about the borrower’s credit score, an increasing number of people are opting to apply for one. You will most likely be approved if you have a stable income and can repay the principal amount borrowed plus the interest rate.
Most people with bad credit who require quick cash turn to cash advance loans to meet their needs. This is where they can get extra cash quickly and easily. Even though there are more loans for people with bad credit, the cash advance loan is the quickest.
4. Enhanced approval rate:
Most people who applied for a cash advance loan were approved and received their funds within 24 hours. As long as you meet the requirements.
5. Having a less significant impact on your credit score:
Compared to traditional loans or credit cards, where you must pay the amount owed over a long period, you will be more vulnerable to financial uncertainties. These late payments will be reflected on your credit report, lowering your credit score. A cash advance, on the other hand, must be paid once and within a few weeks of the loan amount being released.
People nowadays prefer cash advance loans over other options because of the abovementioned benefits. However, remember that you should only use this loan option if you require additional funds for legitimate reasons. Cash advance loans should not be used to fund unneeded expenses.
Therefore, if you are looking for a place to take cash advance loans, CashUSAToday is the best option. They provide the clients with the best services and help them get the loan amount that is necessary for them.