If you find yourself in need of quick cash, you may be considering getting a cash advance. However, you shouldn’t sign on the dotted line until you learn the pros and cons of these loans. Read on to find out more.
Advantages Of A Cash Advance Loan
Certainly the most important advantage is that you get the money quickly. If you were considering a cash advance loan for an urgent need, then this would be a critical aspect. Maybe you need quick cash for a medical or dental emergency, maybe your car broke down and need it to get to work, maybe a family member needs money urgently or perhaps you need money right away to keep paying your bills on time. For whatever reason you need cash quickly, a cash advance loan will be able to provide you with what you need faster than most other loan types. You simply can’t underestimate the power of immediacy.
Qualification Is Easy
A cash advance loan is usually easy to qualify for, you generally only need to be of a certain age. You also don’t need to worry about passing a credit check or providing collateral. You may have the option of applying online for a cash advance loan instead of having to go to an office, which makes it more convenient for some people, especially those who live in rural areas.
For a conventional loan, you will typically be required to fill out many different forms and have to provide paperwork showing your income, tax information, business information, etc. With a cash advance, you don’t need to provide as much extensive information, making the application relatively quick and easy.
Disadvantages Of A Cash Advance Loan
The main drawback to this type of loan is the cost. Some companies will charge a staggering interest rate of up to 500%. If you don’t pay the loan back quickly, the lender may keep extending the loan, and add extra fees. It can literally take you years to pay off what was initially a very small amount of money. Obviously, this is a huge disadvantage.
In some countries and regions, this type of loan is actually illegal, since it is sometimes offered by unethical and unscrupulous companies. These companies are set up to take advantage of people who are in a bad situation. This makes it critical to do your due diligence and make sure to investigate the company you are considering getting the loan from before committing to anything. If you are applying online, you can use the vast amount of information on the Internet to search out reviews and information about the company beforehand. Some companies will even make the borrower sign a contract before they receive the money, and that contract is always incredibly advantageous to the lender, including additional fees and stipulations on payback and interest. Again, this makes it even more critical to make sure you are getting the loan from a reputable lender.
Jack is a finance student pursuing his Masters in Finance and Accounting. He occasionally blogs about business finance and how getting Prospa Business Cash Advance loans can help business.