You may sometimes find yourself in a situation where you need access to cash, whether you need to cover expenses before your next paycheck or get an unexpected bill. These situations can put you in a bind, as you may need money right away. Luckily, a cash advance can help you get funds if you're strapped for cash. What is a cash advance may you ask? Let's dive deeper into what a cash advance is and its pros and cons so you can decide whether taking one out is a good idea.
What is a Cash Advance?
A cash advance, also known as a paycheck advance loan, is a short-term loan you can get from a lender by applying online or in person. Cash advances typically have quick applications and you can get your funds as soon as the same day you apply.
Borrowers usually turn to cash advances if they're in a financial bind and need help covering expenses for a short period of time. After you take out a cash advance, you can repay the loan when you get your next paycheck.
Pros of Cash Advances
- Easy application process: Cash advances usually have a quick and easy application process that will only take a few minutes. Many lenders will give you the choice to apply online or in person.
- Quick funds: In many cases, lenders will give you an instant or quick approval decision for a cash advance. If approved, you may be able to get the funds in your bank account the same day you apply.
- You don't need good credit: If you don't have perfect credit, not to worry. Cash advances don't require good credit for approval, so you may be able to get one with a poor or fair credit score.
Cons of Cash Advances
- Higher interest rates: Cash advances typically come with higher interest rates than other loans.
- Fees: If you aren't able to pay off your cash advance when the loan payment is due, you may get charged with additional fees, depending on the lender.
What Are Some Alternatives?
If you're still on the fence about a cash advance and want to weigh other options, there are other means available to get money quickly.
- Borrow from a friend or family member: If you know you'll be getting cash to repay in the coming days, a friend or family member may be willing to give you money now. Be sure you'll be able to pay it back, though, as money can cause rifts even among good friends.
- Consider a personal loan: With an installment loan you may be approved for more money and you have more time to pay it back..
The Bottom Line
In a pinch, when you'll be able to repay the loan quickly, a cash advance could be a viable option. But if you want to consider other options, borrowing money from a friend or family member or getting a personal loan can help you get funds quickly as well. You should assess your needs and the situation to figure out which option is right for you.
Notice: Information provided in this article is for information purposes only. Consult your financial advisor about your financial circumstances.
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Original Source: Is Taking Out a Cash Advance a Good Idea?
