A short-term loan offered either by a bank or probably a lender is cash advance loan. Cash advance loans are also provided by multiple issuers of credit cards. These loans have interest rates which are considered as ‘steep’ but at the same time are apt for many borrowers who are looking for quick money to cater to emergency requirements. Some information on the different types of cash advance loans is definitely welcome.
Types of Cash Advance:
You find multiple cash advance loans but you need to be aware that almost all of these come with a heavy price of high fees and steep rates of interest.
*Merchant cash Advances:
Merchant cash advance loans are those loans which are taken by merchants or companies from lenders and banks. Businesses which need to grow or even if starting a new business, can opt for this cash advance loan.
*Credit Card Cash Advance Loans:
Credit card cash advance loans are most common. You can borrow from the credit card and the withdrawal can be from an ATM. This is convenient for most people who need funds on an immediate basis. This money required can also be withdrawn via a check from the bank. As mentioned, the interest rate of this type of cash advance loan is high and this can also be around 24%. There is no grace period with this type of loan, so before opting for this specific cash advance loan it is advisable to think twice.
This transaction also involves specific fees and if the funds are withdrawn from an ATM you tend to pay more.
Pros and Cons of Cash Advance Loans:
Cash advance loans work apt only if there is an emergency and not for every requirement. This is perfect for those who intend paying the loan back in a short time. It is only then that this cash advance loans can work better than payday loans or the car title loans. However, opting for the cash advance loans in specific circumstances can cause more harm than good.
- It is advisable not to opt for this cash advance loan if you intent declaring bankruptcy anytime in the near future. You need to know that the debts are examined by the judge and the creditors. Use of the credit card when you decide on filing bankruptcy can be considered as a ‘fraud’.
- Opting for this loan only to fulfill a desire is definitely crossing the limit. The individual who caters to his/her desires to this extent is definitely heading for big time trouble. This offers fulfillment only for a short period of time and puts you into huge debts.
Cash advance loans are apt only for those specific emergencies. If you find yourself resorting for this loan very often you need to ensure you re-plan your budget and learn to live within your means.
Cash advance loans can also arm your credit scores if these are not re-paid on time. A little caution is all that is required before you decide to take a cash advance loan.