A cash advance is a short-term loan offered by lending agencies and payday loan companies for emergencies such as medical expenses and car bills. It does not require any credit or background check. The process of obtaining a cash advance is quite simple. Applications can be filled out online, and the information required covers personal, employment, and bank account details. Upon approval, the amount is deposited in the borrower's bank account.
There is usually no grace period for the repayment of cash advances and interest starts accumulating immediately if the repayment deadline is crossed.
Since cash advances are unsecured, the rate of interest can be as high as 20%. The high rate of interest and short period of repayment may even force the borrower to borrow again. Thus it is important that individuals avail these loans only when it is an emergency, so as to not fall into a debt cycle. If used judiciously, cash advances enable people to avoid late payment fees and even penalties associated with bounced checks. They also enable people to avoid negative marks on their credit score.
Cash advances are available even to those who have bad credit. The requirements for availing a cash advance include a minimum salary that is usually $1000 per month, an age above 18 years, and no delinquency on previous short-term loans.
The amount that can be borrowed varies with the lending institutions but is usually around $1000. First-time borrowers may be eligible for a higher loan amount. The fees depend upon the amount borrowed and the duration of the loan; some lenders charge a flat fee irrespective of the term of the loan.
The due date for cash advances is usually the next paycheck date. In most cases, the period of the loan is not more than eighteen days. Lenders also offer the facility of a refinance if an individual is not able to repay the loan by the designated due date. With some lenders, the refinance option can be availed four times; others allow the loan to be extended to up to 31 days from the day of receipt of the money. The borrower can repay by providing the lender with post-dated checks or the amount plus charges can be automatically deducted from the borrower's account on the due date.
Before opting for a cash advance, one should do some research online to get an understanding of the general terms and conditions and also compare cash advances with other alternatives such as salary advances and an account with an overdraft protection.
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