Cash Advance Loans – Why and How They Work

Have you ever been in a situation where you are burdened with large unexpected expenses and did not know where to raise the money to meet these needs? Are you overdrawn and is your credit card maxed out? While you may have the option of borrowing from friends, not everybody is comfortable being indebted to family or friends.

If you are in a situation like this, perhaps the best solution for you would be to get a cash advance loan or a payday loan. It seems that everywhere you look these days you will see a commercial for a company who is offering a cash advance loan and more and more people are using these loans to get immediate cash to take care of their urgent financial obligations.

Before you commit to a payday cash advance loan, you should know exactly what they are, how they work and how borrowing money from one of these lenders can affect you in the long run.

What is a Cash Advance Loan?

An online cash advance loan is quite simply a small loan made by a third party company that uses your current wage earnings and checking account as evidence that you will be able to repay the loan. Most online cash advance companies will require recent check stubs that prove you earn a certain pre-determined minimum amount each month. They will also need evidence that your checking account has been open and in good standing for at least a month. An online cash advance can often be the quickest route to getting the cash you need for an emergency.

Take a look at this example

Sam hasn’t had the best month. Two weeks ago she was surprised with a power bill that made her wonder if she was supplying heat to the entire neighborhood. As a single mom of two she is already overextended as it is, and she’s still trying to pay off what she spent at Christmas. Before she could take a breath and ask “what’s next?”, she took the car for an oil change only to find out that she had much bigger problems than dirty oil. When the estimate comes back, she looks at the numbers with tears in her eyes wondering how she can possibly afford to fix her car when she doesn’t get paid for another week and a half. She doesn’t have any friends or family to help her out and if she can’t drive to work she’s going to lose her job.

Examples like this happen every day to hundreds, possibly even thousands of people all over the country. Hard working people are caught by surprise by bills right when they least expect them. They don’t need a hand out, just a little boost to get them through a week or two until their next payday. Thankfully with the online cash advance, it can now be easier than ever to get over that little hump. If you can meet the minimum requirements to apply, you can often be approved for a cash advance loan in a matter of just a few minutes and the proceeds from your loan will be available to you within twenty four hours in most cases.

Most often all that is required is that you be at least eighteen years of age with a checking account and a stable verifiable monthly income. There is usually no credit check required with cash advance companies and you can get an advance loan of anywhere between $100 and $1,000, sometimes even more. You should never borrow more money than you really need to meet your obligations.

Advantages of taking Cash Advance Loans

Some of the advantages of taking cash advance loans include:

  • They are hassle-free
  • The process typically takes less than half an hour
  • It is available in an emergency without having to put up any security
  • The proceeds of the loan are deposited automatically into your bank account less than 24 hours after approval
  • It is discreet; nobody has to know that you went through a financial crisis

Cost of taking Cash Advance Loans

Let’s face the facts here – cash advance loans are not free. These companies are in business to make money and make money they do, generally charging a fee starting at about 25% on average. On first glance that doesn’t seem like much — you pay twenty five bucks to borrow a hundred. They usually come due in two weeks at which time you can either pay off the loan or extend it for a longer period. Be mindful that extending your loan will increase your fees, so you need to be careful that you don’t get caught in the trap of constantly renewing a payday loan out of convenience. With most cash advance loans carrying an annual percentage rate (APR) of 650% or more, when the fees catch up to you it will be anything but convenient for your budget! It is important to pay your cash advance loan off as soon as you can.

Live A Debt-Free Life With Bad Credit Cash Advance Loans

Getting approval for a loan is a big hassle, as it demands many formalities along with the time. However, one faces dire complexities if one is having a bad credit history because not many finance companies offer loans to them. But do not get hassled as there are many private firms and lenders that are offering loans like bad credit cash advance loans to people with poor credit history.

Bad credit cash advance loans is a good opportunity for people to live life comfortably. However, if you or someone else is suffering from such history, them he or she should make haste and grab the golden deal for a progressive future. Therefore do not hesitate and apply for bad credit cash advance loans. Well, one is able to forget is or her credit history with the help of bad credit cash advance loans. However, a bad credit history always cites a problem for the person seeking loan as it makes him embarrassed during the time of applying and even procurement of a loan and is usually looked at, as an issue. Well, life is such a vicious circle that can land anybody into a financial and emotional trap especially when one is in dire need of financial support. Anyhow bad credit cash advance has been created for people with poor credit past.

Moreover, bad credit borrowers can apply for cash advance loans without any hesitation and get instant approval for bad credit cash advance loans. In fact, according to various surveys conducted in the United Kingdom, people with bad credit history are increasing because of the hectic and competitive life style compelling more and more people to apply for bad credit cash advance loans. However, borrowers must aware of the fact that many leading loan providers do not pay much heed to the credit history. In fact, they try to cater to all with credit or no credit history; one can easily find cash advance loans. Thus, it is advisable to keep the worries aside as these loans are there to help and rescue people in their bad times. However, for applying for such loans with bad credit, one has to be in regular employment for at least 6 months, along with current checking account and has to be above 18 years of age.

In addition, the bad credit loans require the borrowers to fill up an online application form. One can get loans for temporary cash emergencies. Bad credit cash advance loans provide cash up to ¤1,000. It is easy to fill and requires only few of details like name, address, employment and social security number. The moment the person uploads the application form, the experts get start working on the credit application. This enables the experts to good deals for borrowers according to their requirements. However, it is always beneficial to talk to professionals or the people who are involved in bad credit cash advance before applying for bad credit cash advance loans. Bad credit cash advance loans are a good option and hassle-free way to get rid of one’s debts.

Cash Advance Credit Cards: You Should Know About These Costs

While cash advance credit cards allow you to use part of your credit line to withdraw cash, there are a number of fees and fine print issues that must be considered before proceeding with a cash advance. Getting a cash advance from your credit card is easier than ever. However, one must be aware of the expenses associated with taking a cash advance before inserting their credit card into an ATM. While there are a limited amounted of credit cards that offer 0% cash advances for 1 year, most charge much higher interest rates on cash advances than they do on regular purchases.

First off, there is a 99% chance of being charged a cash advance fee. Of the over 70 credit cards covered on Credit Card Depot, I could not find a single card that charged less than a 2.9% cash advance fee. Some cards even impose a $10 minimum fee. That means the cash advance fee can be 5-10% if you are only taking $100 or $200. Taking out less than $300, therefore, can be expensive.

Now, unless you take advantage of a 0% interest cash advance offer, you will also be charged a higher interest rate on the money you take out. For example, a very popular credit card with a variable 11.24% interest rate on purchases charges 23.49% on cash advances. This is not the exception, but the rule. Regardless of your credit, you will likely be charged 23% or higher on your cash advance balance.

There’s another sticky issue here. When you repay your credit card, your dollars go first to the balance that is being charged the lowest interest rate. For example, let’s say you have a $2000 balance from purchases at 11.24% and a $1000 balance from cash advances at 23.49%. Until you have paid off the $2000 from purchases, you will continue to pay the higher interest rate on your cash advance. This is an unfortunate trap many cash advance users fall into.

Now, there are ways to limit the expense of taking a cash advance from your credit card. First, you can find offers that will give you a 0% interest rate for 1 year. At the end of that year, you can pay the cash advance balance in full or, if your credit is good enough, transfer that balance to a 0% balance transfer credit card. However, if you do not repay the cash advance, you will get hit with an interest rate in the mid to high 20% range. Also, you may be charged a balance transfer fee.

If you have a balance on your current credit card, it is probably better to get a new credit card for your cash advance to avoid the messy interest rate situation having purchases and cash advances on the same card creates. Also, if you cannot repay the cash advance in a short period of time, you could transfer the balance to your current credit card and pay a much lower interest rate on your cash advance.

Taking a cash advance from your credit card does cost money. However, the wise use of a cash advance can limit the astronomical expense taking a cash advance often entails. By taking interest rates, cash advance fees, and the fact that paying off a cash advance on a credit card with a balance is not that easy into consideration, one can effectively use a cash advance credit card without falling prey to the traps in your credit card’s fine print.

©2006, Credit Card Depot Inc. This article may be reprinted as long as a live link to remains intact.