Peoples' State Bank

Cash Advance Online: Pros and Cons

In emergencies, when money is urgently needed, people usually turn to friends and relatives for help. But they are the same people, with their own problems and concerns, so they are not always able to help. In such circumstances, it is not uncommon for people to turn to online cash advances.

Undoubtedly, this is an easy and fast way to get money here and now, but it also has drawbacks.

What is Cash Advance Online?

An online cash advance is a short-term loan of a small amount of money that can be obtained using a computer or mobile phone. To get it, the borrower needs to fill out an application on the lender's website or with the help of an application on mobile.

The term "cash advance" can often refer to two similar yet different loans - a credit card cash advance and a payday loan.

Credit card cash advances allow borrowers to withdraw cash from their credit cards. Most credit card companies require higher than usual interest rates for these transactions. They also may be excluded from any discounts or programs the credit card company offers.

Payday loan cash advances fully reflect their name. This is a short-term loan, the term of which is usually 14 days or a month. The borrower can receive a maximum of $1,000 and must pay it back in a lump sum payment by the due date, along with interest and fees.

Pros of Cash Advance Online

Time. When a borrower needs money immediately, this type of loan can help. Lenders do not spend days checking the credit rating; they limit themselves to checking the borrower's solvency. Therefore, at most, such a loan can be obtained during the day - the next business day.

Convenience. In order to apply for a loan and receive money, the borrower does not need to go anywhere. This can be done at home, work, or anywhere else where the borrower has internet access and a laptop or phone. The borrower fills out an application, the lender checks all the necessary items, and in a couple of minutes, makes a decision whether the borrower can get a loan or not.

Available to people with bad credit. The lack of a good credit history often becomes an obstacle in the borrower's way to money. For a cash advance online, this is not a problem. Lenders are guided by the borrower's income, not by his past history so that anyone who needs it and can afford it can get approval.

No collateral is required. Because the cash advance is an unsecured loan, it does not require collateral. So, firstly, it relieves the borrower of the fear of losing something valuable to him in case of non-payment of the loan. Second, it eliminates the need to have something valuable enough to get paid for generally. Unfortunately, not all people have family jewels that can be taken to a pawnshop, for example.

Cons of Cash Advance Online

Interest and fees. For quick access to money, lenders want to get paid. Therefore, the interest rates of cash advances can be pretty high. APR on such loans can reach 100% or more. In addition, fees from some lenders can be up to 15% of the loan amount.

Loan term. Cash advances are very short-term. Therefore, the borrowers need to be sure that they will be able to repay their loans in such a short period. Recall; usually, it is from two weeks to a month.

Loan amount. The most common cash advance is $500. In rare cases - up to $ 1,000. Therefore, if the borrower needs a larger amount, this is not the type of loan that can help.