Deciding which type of loan should take out is a tedious task. There are different loans that have varying procedures and requirements. Ideally, it is best to take out a loan that will suit your current financial need and your credit standing. Luckily for those 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. If you are a credit card holder and would 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, a credit card cash advance is a short-term loan which a borrower can avail of between 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.
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 The usual mode of cash transfer is via bank which can be withdrawn right away. If you have bad credit standing, there is a very slim chance of getting a loan, but with a cash advance from MoneyMutual, people with bad credit always have a choice.
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.
What are the Pros and Cons of Cash Advances?
- Provides fast cash funding without a required collateral or co-maker
- Application process is simple and easy
- Annual percentage rate is high
- Additional fees will be collected
- No grace period with accumulating interest starting at day one
For people who are experiencing financial hardships, cash advance is a great way to ease the burden despite its disadvantages. But if you are a responsible borrower – you make repayments on time or before the due date or pay in full before the loan maturity – you will always feel the benefit of cash advances. Whatever kind of loan, even those loans with lower interest rates can be a disadvantage to the borrower if he or she will not learn to manage debts effectively. Remember that taking out loans is a huge responsibility that can make or break you in the future. If you are good at paying your debts, you will benefit from having a good credit history and score so you can get loans with better terms in the future. Always remember that loans and debts should be taken seriously to avoid your finances from getting out of control.