If you’re short on money and have a while to wait until payday, then taking out a cash advance online could be a good option. There are a huge number of companies that offer cash advances and payday loans and that are flexible with the credit that they offer people.
Cash advances are short-term loans that are intended to allow people to get the money that they need, even if they are a sub-prime borrower. People who take out cash advances are usually less well off and maybe in unstable situations. The lenders are happy to let them get credit because they charge higher interest to offset the risk of the borrower defaulting. The loans have very high annual equivalent rates – but you’re not paying that full amount because you’re borrowing for very short periods of time.
There are some ‘traps’ associated with cash advances – when you borrow; you need to think carefully about whether you’ll be able to pay the loan back. After all, if you’re short on money this month, what will make next month any different? Taking out a cash advance online to pay for a broken appliance that you need to wash clothes with so you can go to work makes sense. Taking out a cash advance to buy presents for a friend’s birthday does not.
A right lender will understand that and will offer people help when they need to take a cash advance online.
Some people who take out cash advance loans find that they end up unable to pay off the whole amount (with the added interest) on their next paycheque. This means that they ask to borrow again, rolling over the loan. Each time they do this, more interest is added until the loan becomes unmanageable. This is a serious issue and can cripple many borrowers.
To avoid this sort of situation, responsible lenders do affordability checks and will freeze loans if there are issues that might stop someone from being able to pay the loan back. There are limits on the amount that can be borrowed, and the number of times that a loan can be rolled over with those lenders, to ensure that people don’t plug a gap in their salary with loans that they really cannot afford.
So, should you take out a cash advance? Well, if you are short on money for something that is important – such as a car repair to take the kids to school, or you can’t pay heating in the dead of winter, then maybe that is a good reason to borrow. If you want to buy presents or pay for a holiday or a birthday party, then sadly it may be better to do without – because you’ll be paying back that spending plus a whole lot more, and you’ll just need to borrow again next time. It may make more sense to wait, save, and buy with your own money, up front, next time.
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There is another form of an easy cash advance – on credit cards – that sometimes gets forgotten about. This is also an expensive form of borrowing. With cash advances on a credit card, you are charged a fee for pulling money out of the ATM, and you are then charged a higher rate of interest on that borrowing. Also, when you pay money off the credit card, the lowest interest part of the balance (the balance transfer, or if you don’t have one of those, the purchases made on the card) is paid off first. This means that if you’re paying the minimum payment or just a little bit more, you could be paying off that cash advance for years. Rather than risk that, it makes so much more sense to just use the card the way it was intended – even if you end up spending the same amount as you were going to withdraw at the ATM, at least the interest paid will work out lower.
Borrowing is something that should be done after serious consideration. If you make mistakes with it, then they can be financially crippling for a long time to come. With that said, everyone has the occasional crisis or falls on hard times, and for those who do not have savings, a cash advance or a payday loan can be a genuine lifeline, and could make the difference between being cold in the winter, or losing their job because of a broken car or a lack of a uniform, and making it through that crisis. Those are the times when you would turn to high-interest lending, and in those cases, they really can be a valuable service. Just make sure that you are borrowing for something that you need, not something that you just happen to want.