If you’re living in the United States, you’ve probably obtained a loan at some stage in your life. Lenders try and make the process sound easy, but it can actually be more complicated than you think. If you don’t know how to approach the subject, you can end up wasting valuable time and money. Cash advance loans are part of a budding industry that provides quick cash to consumers. They’re able to bypass a lot of the red tape that traditional lenders use to slow down the lending process.
But they come with their own risks, that’s why it’s important that you’re fully aware of cash advance loans and how they operate. If you’ve ever wondered about cash advance loans and the types of features that are included with them, this article will be a great resource for you. We’ve compiled everything you need to know about cash advance loans and how they might be able to help you. In addition, we provide some alternatives that you may find appealing.
Make sure that you carefully consider all the content provided in this guide. You don’t want to get in a situation where you are caught off guard – it’s important to be as aware of a borrower as you possibly can be.
What is a Cash Advance Loan?
A cash advance loan is simply a loan that provides you with an advance of cash. These types of loans typically come in the form of payday loans. Payday loans are loans that are tied to the value of your next paycheck. Payday lenders will give you money with the understanding that you pay back the loan when you receive your paycheck. You typically pay a large fee for this service. If you don’t pay back the loan in entirety, you will begin to accrue interest on the debt. For this reason, it’s very important that you use cash advance loans when you know you can pay back the loan on the first payment date.
The good thing about cash advance loans is that they are typically unsecured, which means you don’t have to put your family’s financial security at risk when you obtain one of these loans. In addition, you don’t have to get a credit check. Cash advance lenders will typically provide you with money as long as you can prove that you have an upcoming paycheck that equals the value of the loan and fee. Lastly, most cash advance lenders can get you money as soon as you apply for their financing. They have online and physical locations that provide quick services.
Many people operating in the cash advance loan industry are considered predatory lenders. Predatory lenders are lenders that provide people with cash at extremely extortionate rates. They often don’t clearly advertise the rates that they are providing to people, this is done in order to provide people with as little information as possible. Predatory lenders like to paint a picture of financial freedom, when they’re truly luring people into possible debt traps.
It’s important that you avoid lenders like this. You want to make sure that the cash advance lender you are using isn’t one that is overly predatory. There are a few ways that you can try and prevent this from happening. Make sure to check the following things before you enter into any financial agreements with a cash advance loans company.
Check Interest Rates
This is the first thing that you should do. You need to make sure that the interest rates you’re looking at aren’t too high. Make sure that you get to view the full interest rate that you will be charged on an annual basis. The last thing you want to do is end up with an extremely extortionate rate – this is the easiest way to get into a debt trap.
Many cash advance loan companies may charge you up to 1,200% interest. This is an astonishing rate when you compare it to the rates that many traditional lenders will charge you. Make sure that you’re not exposed to such a ridiculous rate.
Another way that many cash advance lenders make money is through charging you a large amount of fees. You need to make sure that you’re fully aware of any fees that you might be responsible for paying. You don’t want to end up finding out that you’re responsible for paying much more than you originally thought. Hidden fees are a real problem in this industry, so make sure you discuss all your responsibilities with the lender.
The best way to do this is to ask them for an official breakdown of the entire cost of the loan. This will allow you to see the true value of the loan you are getting, it will also allow you to do effective comparisons with other lenders. Remember, interest rates aren’t the only way that you end up having to pay extra money to lenders.
Check with Consumer Watchdog Groups
Lastly, you should always make sure to check with past customers to see how they enjoyed the services of the lender that you are thinking of working with. Again, you should never work with a company that has a track record that indicates they are shady with their customers. There are plenty of bad lenders in this industry, you need to be certain that you are working with one that is ethical.
Both Consumer Affairs and the Better Business Bureau provide consumers with information on the operations of a company. You can find any lender or business in the United States on these web pages. Past customers are allowed to post complaints and testimonials about the lender – and these consumer watchdog groups even do their own research to determine if a lender is worth working with.
Advantages of Cash Advance Loans
After reading through all the information in this guide, you’re probably still trying to decide if cash advance loans are right for you. We’ve compiled a list of all the benefits of this form of finance, make sure to check it out before you make any decisions.
- Instant – If you can prove that you have an upcoming paycheck, you can be instantly approved for money and receive cash the same day. For this reason, it’s great for those who need cash extremely quickly.
- Cash in Hand – Unlike a credit card, cash advances provide you with cash so you don’t have to worry about paying any cash related expenses.
- No Credit Check – One of the biggest benefits of this form of finance is that you don’t have to get a credit check. This means that you won’t damage your credit by applying, and you won’t be denied because of a poor credit history.
Disadvantages of Cash Advance Loans
While there are advantages to getting cash advance loans, there are also some disadvantages. It’s important to consider both the benefits and drawbacks when you’re making any financial decisions. Below we analyze what the disadvantages of this form of finance are:
- High Interest – The primary disadvantage of cash advance loans is the high interest you will have to pay if you end up missing the first payment. You don’t want to be in a situation where you are accumulating debt at an extremely fast pace.
- High Fees – Another problem with cash advance loans is the fees associated with the loans. There are often very high fixed fees associated with these types of loans.
- Bad Lenders – There are many cash advance lenders that are considered predatory. They don’t have the best interest of their clients in mind – you have to be especially careful about who you work with.
Alternatives to Cash Advance Loans
If you need money but you’re worried that you won’t be able to pay back your cash advance loan in time to prevent large amounts of interest from accruing, you may want to consider alternative forms of finance. You don’t want to end up with a large amount of debt because you were unable to pay back a loan on time. It’s very important that you know whether or not you are capable of paying back a cash advance loan.
Fortunately, there are a few other options that you can look at if you want to make sure that you don’t get cheated out of your hard-earned money. We’ve compiled a list of alternatives that you may want to consider if you are worried a cash advance loan is wrong for you.
Online Personal Loans
Online personal loans are part of another booming personal finance industry in the United States. Many online lenders can provide you with cash within 24 hours of approval, meaning that you will be able to get money extremely quickly. You can also fill in an online application in about ten minutes.
The major downside to this is that you will have to get your credit checked. This means that if you do end up being rejected, your credit score will decrease. In addition, if you have a bad credit score, you won’t be approved in the first place.
Peer to Peer Lending
Peer to peer lending is another platform that you can use to get small amounts of cash in a hurry. Peer to peer lending allows consumers to lend to other consumers. It’s the perfect way to obtain finance without using traditional lenders. There are various platforms that facilitate this type of lending online. The online platform will take a small commission for their services.
This is a good option for those who want to get small amounts of money. You won’t find large unsecured loans on peer to peer lending platforms, as it is too risky. Fortunately, you’ll be able to get financing without a credit check. Many peer-to-peer lending platforms do provide loans without credit checks or with soft credit checks. The interest rates associated with this form of finance do tend to be much lower than those of cash advance loans. For this reason, this has emerged as a popular alternative for those who know they will not be able to pay back their loan by the first payment date.
You do need to be wary of fees though – always check you’re not overpaying.
Soft Credit Check Personal Loans
Soft credit check personal loans are a good option for those who don’t want to damage their credit report when they apply for financing. If you’re looking into cash advance loans because you want to prevent inquiries on your credit report, this is another good option. Hard credit checks are the type of checks that lenders typically use – they’re the most in-depth check available. But they also record an inquiry on your report, which damages your score.
Soft credit checks do a surface level check, but they don’t record an inquiry on your report. This is a great way to ensure that a rejection doesn’t unnecessarily damage your report!
After reading this guide, you should have a pretty solid understanding of cash advance loans and how they might be able to help you out. They’re meant to be short bursts of cash in emergencies – they shouldn’t be used regularly. You need to make sure that you understand the consequences of not paying these loans back on time. There are also a few other alternatives you can use that provide similar features. You should always consider all your options before making any financial decisions.
Choosing the right lender can be the hardest part of the process. That’s why you should always make sure to do as much research as possible. If you head to our homepage, you’ll find a variety of lenders that we recommend using. We recommend these lenders because we want our readers to have a head start on finding the right lender to work with.
If you have any more questions about personal finance, make sure to check out some of the other resources on our site. We make considerable effort to provide our readers with as much informative content as possible.