When you need cash, there are a lot of options available. One of the most controversial, however, is a cash advance loan. While everyone has different views on cash advance loans, there is a need for this type of financial service.
What Is a Cash Advance Loan?
A cash advance loan, sometimes called a payday loan, is a short-term loan in which an individual can receive money quickly. Usually, cash advance loans are used in cases of emergencies, such as when people need money on the same day. Like other types of loans, a cash advance uses collateral. However, unlike a car loan in which the company holds the deed of the car as collateral, the company uses the individual’s checking account as collateral. As such, most cash advance loans require only a checking account, a regular source of income, and a personal identification card to be approved.
The Cash You Need Quick
The biggest advantage of cash advance loans over others is how quickly people are approved. Most people think cash advance loans only provide small amounts of money, between $100 and $500. While this is a typical amount, according to the Chartered Financial Analyst, people can be approved for upwards of $1,000.
Fees Are Usually Lower Than Bounced Checks
When people find themselves in hardships, bills do not stop coming. Cash advance loans can put money in their pockets so that they avoid typically higher fees. For example, many cash advance companies charge a fee between $15 and $20 on a $100 cash advance. The person who borrows the money is usually given around two weeks to repay the loan. Compared to the average bounced-check fee of $50 or the $45 charge for paying the utility bill late, it is easy to see why many people choose cash advance loans instead.
Benefits of a Cash Advance Loan
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Availability of Quick Cash
The ability to obtain funds promptly makes a cash advance loan quite handy. Due to the substantial paperwork, credit checks, and potential length of processing, personal loans and bank lines of credit typically need days or weeks to complete. Quick and simple is how cash advances are intended to work. An online application is available from many lenders; if you complete it, you will typically hear back from them within minutes following approval. After being authorized, the funds are usually sent into your bank account within a day.
This is so beneficial in emergencies, especially when it counts the most, such as covering medical bills, avoiding late payment fees, or dealing with an unmanageable expense that cannot wait.
Minimal Requirements
Loans for cash advances differ greatly from other types of loans, for which there may be highly strict qualifying requirements. For instance, the majority of lenders will demand that you have a current bank account, be at least eighteen years old, and have a reliable source of income. These requirements are comparatively lax when compared to other loan types, making cash advance loans available to a wide range of borrowers—particularly those with bad credit scores and histories. For people who might not be eligible for more conventional loan types because of bad credit or no loan history, this is highly advantageous.
Availability of cash advance loans to poor credit individuals benefits them because they might not have otherwise had access to a loan at a bank or credit union.
No Collateral Requirement
Another significant benefit of a cash advance loan is that it is unsecured, meaning you do not need to place any collateral to receive the cash. This contrasts a secured loan, like an auto loan or mortgage, whereby you provide an asset, such as a car or house, as security. If you cannot repay a secured loan, the lender can seize your collateral.
With a cash advance loan, you do not have to worry about the risk of losing your property. Although the interest offered on unsecured loans is relatively higher compared to secured loans, the peace of mind that you are saved from potential losses to your collateral can be worthwhile for many borrowers.
Flexibility in Use of Funds
Cash advance loans give the flexibility of using the funds in any way as desired by the borrowers. Contrary to most loans, which are used for particular purposes – like a mortgage or an auto loan – you can use a cash advance for anything, from paying an overdue bill to rent to travel expenses you did not prepare for. A cash advance loan allows you the freedom to do whatever you want with the money, such as trying to make ends meet until your next paycheck arrives.
This is a popular option among people in need of money because there are many reasons to wish not to be bound by the conditions related to a lender.
Avoids Overdraft Fees and Late Payment Penalties
Financial shortfalls also create a damper of expensive consequences rolling down. For example, if you miss the payment for a check or some debit transaction, the bank charges you an overdraft fee. Similarly, missing credit card payments or bills leads to late fees and penalties, which add up quickly and make matters worse.
An advance cash loan can be a bridge between paychecks by providing access to available money within hours, which may help you avoid penalties associated with such services, for example, insufficient funds fees. Of course, there is no free lunch, and you may expect to pay interest and fees on a cash advance loan. However, in many instances, these costs might be less than what you could end up owing if your bills went unpaid or your bank account was overdrawn.
Bridge Between Paychecks
Many people live paycheck to paycheck, so a little financial upset can also upend a budget. A cash advance loan might just be what is needed between paychecks to pay for necessary expenses. This is especially helpful when you have an emergency expense but are still several days or weeks away from your next paycheck.
The cash advance loan could fill the gap between your pay periods and allow you to keep paying your accounts without being forced to resort to some more desperate measures, such as borrowing from friends and family or selling valuable possessions.
Other Services
Most cash advance loan companies also provide other services such as cashing checks, money orders, prepaid cards, and business checks. Some even providefinancial budgeting help for people who need it. While it’s true that cash advance loans might not be for everyone, it is hard to deny that they have a place in the world of financial options.
Trusting a Cash Advance Loan Company
The key to having a good experience with a cash advance loan company is to find a trustworthy one. An example of such a company is Amscot, which has proven itself over the years partially because of the hard work of CEO Ian MacKechnie. While working with Amscot, he continues to serve on the board of the Community Financial Services Association of America and the Financial Service Centers of Florida. His experience in the financial marketplace has allowed him to build Amscot as a pillar of support for people in financial need.
Conclusion
Cash advance loans provide a number of advantages that make them a wise choice in an emergency, even though their high interest rates and other costs should be considered while using them. For those in temporary financial troubles, their easy application procedure, low restrictions, collateral-free nature, and flexible spending options make them a desirable option.
