A cash advance (also commonly referred to as a payday loan) is one of the most popular types of short-term loans.
The borrower is able to take out a certain amount of money which he then must usually repay within a month. The service is provided by many credit card providers, loan lending companies and banks. It allows borrowers to withdraw a certain amount of money either from an ATM, from a bank, or from another financial institution. Usually, these loans have higher interest rates and fees compared to many loan types. However, they also have many features that attract borrowers.
Even though it may feel a bit similar to using a debit card at an ATM, a cash advance is something quite different. When using debit cards, the money is instantly drawn out from your account to pay for your purchase.
If your account does not have enough money in it, you simply will not be able to make your purchase as the payment will be declined. With credit cards, the money you spend is shown in your account as a charge. Since credit card cash advances are actually loans, they do come with certain interest rates and fees which are normally higher than a usual credit card purchase. Therefore, if you plan on using the cash advance option on your credit card, you should first know exactly what the fees and interest rate are going to be.
Unlike many traditional loans from conventional loan lending institutions, cash advances have a very fast and simple application process, quick approval and quick money transferring. All done online and near you as your computer is usually close.
The amount of the payday loan can vary depending on the specific type, but most borrowers are allowed to take up to $500 with a loan term of no more than two weeks. Since they have a rather high-interest rate and fees, these loans should be used mainly during an emergency financial situation.
If you cannot repay your quick loan on time, you risk finding yourself in a situation much worse the one you were in prior to taking out the loan. So if you do not want to fall into a debt cycle, do not go for a one unless you really need it and unless you are perfectly prepared to repay it on time.
A merchant cash advance is a certain amount of capital that a company receives from a bank or a lender. Usually, companies that do not have perfect credit score use merchant advances to finance their business.
The received amount of money is then repaid over a certain period of time, with the lender receiving a certain portion of the borrowing company’s monthly sales.
This goes on until the merchant loan is fully repaid, including interest rate and fees. Such loans are available to business with bad credit score due to the fact that the lenders are normally interested in the business monthly revenue rates, therefore, their ability to repay the loan.
Payday loans are the most popular type of short term loans. They are a small sum, short-term loans which the borrower takes out and has to repay by his next payday. The usual amount of money that direct payday loan lenders provide to their borrowers does not exceed $1000.
Normally, the length of a payday loan is no more than 14 days. Each state, however, has its own law regulations and so the terms and conditions of each payday loan can be different.
Payday loans have higher interest rates than most types of loans, with a possible annual percentage rate of more than 390%. That is why payday loans should be used as a last resort option to deal with emergency expenses.
Taking money from your employer is another viable option. The interest rate and fees may vary depending on your company’s specific policies. If you are thinking about borrowing money from one of your company’s programs, do not forget to read every detail.
This includes interest rate, fees, and other charges. In order to be eligible for an advance from your employer, you must have worked in the company for at least 90 days. You would need to have an active bank account so that the money can be directly deposited there.
This type of advance depends more on your available credit card limit and not so much on your monthly income. Normally, a credit card loan is similar to a purchase made with your credit card, and so the repayment terms depend on your credit card policies.
A credit card loan may or may not be a better option than a payday loan. This is highly dependent on your credit score and the specific terms of your credit contract. There are credit card companies that charge higher interest on cash advances compared to standard purchases.
Direct deposit advances are another form of advances. Direct deposit advances are a lending tool with which banks give their customers advances on their deposits.
Then, once the deposit is made, the bank recoups the loan as well as the fees that go with it. Usually, the direct deposit loan repayment is taken out of the account before any other checks.
Cash advances can be a great option to deal with a difficult financial situation if used correctly. If you have any doubts about your ability to repay the payday loan on time, you may want to look for some other alternatives.
They also have minimal or no credit checks and same day approval which is great if you happen to be in that category. There are plenty of ways to get financial assistance. You just have to find the one that best suits your specific financial situation. No matter what form of financial help you choose, always calculate your budget and spare no effort to make your payments on time.