There are different loans that have varying procedures and requirements and deciding which type of loan you should take out is a tedious task. Ideally, it is best to take out a loan that will suit your current financial need and your credit standing. For those of you who are in need of quick funding, a cash advance is a good option.
What Is a Cash Advance?
Basically, a cash advance is a short-term loan borrowed from the bank who issued the credit card. There are also other non-traditional lenders who offer cash advance loans, and you can also get cash quickly online from them. If you are a credit card holder and need to take out a cash advance loan, then you will be borrowing against your credit card limit which is often separated from your regular car limit for your purchases. There are several types of cash advances which have different features.
Credit Card Cash Advances
Offered by credit card issuers, credit card cash advance is a short-term loan which a borrower can avail of up to 20 to 30 percent of the available credit limit of the card. Other credit card companies can provide a cash advance of up to 50% or more against your available credit limit.
Payday Loans
Lenders will require proof of income which will become a form of warranty for your repayment. Funds are quickly transferred to the borrower’s account right after approval. The usual mode of cash transfer is via bank which can be withdrawn right away.
Merchant Cash Advances
Merchant cash advances or MCA are intended to provide funding for small businesses. The procedure is that the loanable amount is projected based on future incoming sales. Processing is quick and funds are remitted within a few days.
Pros and Cons of Cash Advance
Pros
- Provides fast cash funding without a required collateral
- Application process is simple and easy
Cons
- Annual percentage rate is high
- Additional fees will be collected
- No grace period with accumulating interest starting at day one
To someone who needs cash fast, a cash advance can be helpful. Just make sure to have a solid plan for paying it back quickly, because it can be disastrous if the borrower will not be wise in his or her goals on borrowing the money.
A cash advance is a fast access to cash when you need it; no need to wait for banks to open or for long approval processes. But getting immediate cash on your hand doesn’t mean you can spend it any way you wanted. Make sure that whatever amount of money you get from a cash advance loan, it will go to your needs and not wants. Cash advances are meant for the most important things in life such as our daily expenses for food, shelter and transportation. It is also a wise idea to use it to pay other loans that have a higher interest rate or for debt consolidation. Many people drown in too much debt because they don’t have a concrete plan on where and how to spend the money wisely. Before you borrow money – big or small – think first about whether it goes to the things that will generate income in the long run or will make your life better in the future.
