If you need some money quickly then one of the only ways to be able to get it is with a cash advance. That is, if you are not able to get it from a friend or family member. If you have to get an official loan, then this kind, which are much the same as payday loans, will be just about your only option. So how do they work?
How do Cash Advances Work?
What is a cash advance? It's a lot like getting an advance on your monthly salary because it's a short term loan that has to be paid back when you're next paid. Of course it's not exactly like an ordinary advance because you are going to have to pay interest on it, as you would with any loan.
As long as you can afford the loan from a monthly salary then you should have no problem getting a loan like this. It's important that you get paid every month though, rather than every week for example. Other than that though, things like credit ratings are not going to come in to it.
Making an application for a a loan like this is very simple, much more simple than it is to apply for most other sorts of loans. For instance, you can do it all online, and it is only a short form that you are going to have to fill in online. The most important questions will have to do with what has already been mentioned, when you get paid and how much.
These are loans which have been designed to last for about a month, which is why you have to receive a monthly salary. That is what they have based the interest rates on, as well as the amount that you are able to borrow. It's for this reason that you can't usually get a loan like this if you get a weekly wage. Although having said that you can certainly get the loan even if it's only going to be a few days until you are paid.
Interest Rates
There is understandably some confusion about how much you are going to be charged in interest for a cash advance. That's because the APR has to be displayed so prominently according to law, even though it is practically meaningless in this case. After all, it's measuring the amount of interest that would be charged in a year, whereas a month is all that a loan like this is supposed to last.
It should be very clear just from these simple definitions of what cash advances are and what the APR measures as to why the APR is not a good way of measuring this kind of loan. After all, are you going to be concerned about how much interest you would have to pay over 36 years if you were just getting a 3-year loan? Of course not, but that is a precise analogy of what is going on here.
If you want to know how much interest you are actually going to be charged it shouldn't be too hard to find that information on the site of the lender. Normally though it is going to be around 25%, if they are offering a good rate. As this is a short term loan though, and not long term, that rate will increase quickly if you don't repay on time.
The reason that it would not be a good idea to be able to treat a short term loan like a long term loan is that it would take a lot longer to be able to get it. As cash advances operate over such a short time frame it is possible to get one very quickly. The lender doesn't feel they need very much information, for example a credit history, because you have to pay it back so fast. If that were not the case then it would take a lot longer to get the money and loans of this sort would no longer be so useful in an emergency.
How do Cash Advances Work?
What is a cash advance? It's a lot like getting an advance on your monthly salary because it's a short term loan that has to be paid back when you're next paid. Of course it's not exactly like an ordinary advance because you are going to have to pay interest on it, as you would with any loan.
As long as you can afford the loan from a monthly salary then you should have no problem getting a loan like this. It's important that you get paid every month though, rather than every week for example. Other than that though, things like credit ratings are not going to come in to it.
Making an application for a a loan like this is very simple, much more simple than it is to apply for most other sorts of loans. For instance, you can do it all online, and it is only a short form that you are going to have to fill in online. The most important questions will have to do with what has already been mentioned, when you get paid and how much.
These are loans which have been designed to last for about a month, which is why you have to receive a monthly salary. That is what they have based the interest rates on, as well as the amount that you are able to borrow. It's for this reason that you can't usually get a loan like this if you get a weekly wage. Although having said that you can certainly get the loan even if it's only going to be a few days until you are paid.
Interest Rates
There is understandably some confusion about how much you are going to be charged in interest for a cash advance. That's because the APR has to be displayed so prominently according to law, even though it is practically meaningless in this case. After all, it's measuring the amount of interest that would be charged in a year, whereas a month is all that a loan like this is supposed to last.
It should be very clear just from these simple definitions of what cash advances are and what the APR measures as to why the APR is not a good way of measuring this kind of loan. After all, are you going to be concerned about how much interest you would have to pay over 36 years if you were just getting a 3-year loan? Of course not, but that is a precise analogy of what is going on here.
If you want to know how much interest you are actually going to be charged it shouldn't be too hard to find that information on the site of the lender. Normally though it is going to be around 25%, if they are offering a good rate. As this is a short term loan though, and not long term, that rate will increase quickly if you don't repay on time.
The reason that it would not be a good idea to be able to treat a short term loan like a long term loan is that it would take a lot longer to be able to get it. As cash advances operate over such a short time frame it is possible to get one very quickly. The lender doesn't feel they need very much information, for example a credit history, because you have to pay it back so fast. If that were not the case then it would take a lot longer to get the money and loans of this sort would no longer be so useful in an emergency.
About the Author:
Additional writings about payday loans by author Ollie Wilson can be seen at cash Advance.
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