Cash advances typically have high-interest rates. These rates make them difficult to repay. In a situation where one absolutely needs to apply for one, it is best to know how to go about acquiring one at a low cost.
What Is a Cash Advance?
A cash advance loan is a short-term loan obtained from a bank, finance company, or online.
This also refers to the money provided by credit card issuers, where you can withdraw an amount of money with your credit card from your credit limit.
Cash advances are usually relatively easy to access but incur higher interest rates than conventional loan alternatives.
Types of Cash Advances
Besides the popular credit card cash advance, there are other types of cash advances that do not totally operate the same way. It is important to know the different types and pick the one that suits you best. They are listed below.
- Credit Card Cash Advance
- Payday Loan
- Installment Loan
- Merchant Cash Advance
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Credit Card Cash Advance
This is the most popular type of cash advance. It is also easily accessible as most credit card companies do not consider your credit history before sending you a credit card.
Credit cards have credit limits (the highest amount one is allowed to owe on the card). Users are allowed to remove a certain percentage of their credit limit as cash. This can be done by
- Going to the bank where the credit card was issued
- Using the ATM to withdraw money with your credit card and pin, the same way you would use your debit card. Let it be noted that using an ATM may incur some extra fees besides the interest.
- Requesting a convenience check from the card issuers
Credit card cash advances usually have significantly higher interest rates than credit card purchases.
Also, unlike credit card purchases, credit card cash advances start to accrue interest immediately after the money is removed.
Payday Loan
This, in a way, is the actual cash advance. Money is borrowed in advance of the next paycheck. These loans usually span between 15 and 30 days. They are short-term, high-interest loans.
Payday loans are easily accessible online to people with low credit scores as many lenders set their terms and approve loans without much consideration of credit scores.
The risk involved in lending money to people with low credit scores is usually one of the main reasons for the high interest rates.
Installment Loans
Just as the name suggests, money borrowed is returned in installments. The lender will schedule a repayment plan in which you will pay a certain percentage of the loan plus interest at regular intervals.
It can be monthly or even weekly. Student loans, mortgage loans, and auto loans are examples of this category.
They are usually paid back over a long period of time and in many installments, so each payment is relatively affordable. But, unlike payday loans and credit card cash advances, collateral is usually needed to obtain an installment loan. This means that defaulting can lead to the loss of your collateral and damage your credit score.
Merchant Cash Advances
These are loans given to companies or merchants to run their businesses. Conventional lenders will check the business’s credit history, but other lenders might request other details such as the business’s online income.
The loans are repaid by credit card sales. The lender gets a percentage of credit card sales till all is paid with interest. These also incur a high interest rate.
How Do I Get a Cash Advance Quickly with Low Cost
The fastest way to get a cash advance is by checking online. There are brokers such as USBadCreditLoans that give you access to a pool of lenders who can approve your cash advance application within minutes and send you the funds on the same day without taking your credit score into serious consideration. To access such loans, follow these simple steps.
- Go on to their website and submit your information. You will have to fill out a quick form to show the amount needed, your income details, your contact information, and your bank details.
- Wait to get approval. Many lenders who are comfortable with your request will approve the loan, fixing their interest rate and their repayment terms. You have a number of options to pick from. Choose the interest rates and repayment plans that suit you best.
- Get your money. Once you have accepted an offer, the money will be sent directly to your account.
These are very easily accessible and can be gotten in no time, but might not be as cheap as you would want. These are cheaper options to consider.
Request for a Payroll Advance
Some employers offer cash advances to employees. These are low-risk loans for the lenders because they are in charge of the employees’ income and can easily remove the debt. This is why payroll cash advances usually come with little or no interest.
Ask for Forbearance on Your Bills
This is not a cash advance in the literal sense. It is more like simply incurring a debt. If you need some money urgently, you can contact your creditors and ask if they would allow for delayed payment on bills.
If so, you can use the money meant for the bills to meet the urgent need and then pay the bills at the end of the month.
Seak Community Loan Assistance
Some communities, such as neighborhoods or religious gatherings, pool funds together to offer short-term loans to members at very low-interest rates. Similarly, one can get help from non-profit organizations that also offer low-interest loans.
Cash advances can be lifesavers at times as they can bring you out of some really tight situations, but don’t be too quick to rush into one. You have to know how to get the fastest and cheapest option for you.