what is a cash advance loan

When it comes to feelings of accomplishment and pride, the ability to pay your bills is at the top of the list.

Other than Friday, payday is the most anticipated day of the workweek, as it’s the culmination of all your hard work and effort. 

Life, as we know, has a way of throwing situations our way that is unavoidable and expensive. When this happens at the start of or in the middle of a pay period, it can wreak havoc on your finances. 

Thankfully there are cash advance loans. What is a cash advance loan? Let’s take a look. 

What Is a Cash Advance Loan?

In simple terms, a cash advance loan is a short term loan often borrowed from a bank or third party lender. Many credit cards offer cash advance loans, but it’s often better to go to a bank or third party carrier.

Loan Term

Typically the loan terms associated with this type of lending are often only as long as it takes to get your next paycheck.

For those that cannot pay back the loan in full right out of the gate, don’t fret. Most cash advance loan terms offer stipulations for extended repayment.

Interest Rate And Fees

Because cash advance loans are often coupled with a lot of risk for the lender, there’s often transaction fees and interest attached to the agreement.

Fees and interest rates are unavoidable. With virtually any loan from any institution, you will find fees attached. There may be specials with some private banks for zero percent interest rates; however, the qualifications for those rates are incredibly tight. 

Amount Borrowed

The amount an individual is permitted to withdraw is dependant on a number of factors. You will find that this policy changes from company to company.

Cash advance loan amount restrictions can be as low as fifty dollars or upwards of one thousand dollars. There are also some payday cash advance establishments that offer larger loan amounts for individual circumstances. 

Each province has it’s own rules and regulations regarding cash advances, so it’s always best to check with your region if you have additional questions. 

One piece of advice that works no matter your income bracket: don’t borrow more than you can realistically payback. 

Daily Limit

Some cash advance firms have limits set on how much one person can borrow within any given day or week. Not only does this protect the company, but it also protects the customer. 

It can be tempting to take out multiple loans; however, your ability to pay the loan back should always be at the front of your mind. 

Paperwork to Bring

When applying for a cash advance loan, there are a few legal documents you will need to bring. You will need proof of income in the form of a bank statement or pay stubs. You will need a checkbook and some kind of government identification. 

For your government identification, you can bring with you a valid passport or driver’s license. 

Qualification Process

The qualification process is quite simple. Once you have presented all of your documentation, the representative will then look it over and verify it’s authenticity.

There is no credit check involved when applying for a payday loan. The income verification is often enough to get you approved.  

There are a few different types of cash advance loans that you can acquire. Let’s take a look at a few of them now. 

Other Types of Cash Advance Loans

When you need some quick cash, there are a few different options available to you. If you do not want to borrow from friends or family, your local cash advance company is there to help. 

Here are the different types of advances you will have to choose from. 

Credit Card Cash Advances

Most credit cards have a cash advance option listed in their fine print. Most stipulate the amount of money you can borrow against your line of credit.  

Make sure that before you access these funds, you read all of the fine print. The interest is often remarkably high, and the failure to repay the penalty is often steep. 

Some third-party cash advance establishments offer a grace period before beginning to accrue interest. That is not often the case with credit card cash advances. Most start accruing interest the moment money changes hands. 

One other thing you need to follow up on is how the money sent to the credit card company is applied.

If you do not carry a balance on the card, then obviously, it will all be applied to the loan balance. However, if you carry a balance on your card, then double-check the fine print to see how much of your payment will go to your purchases vs. your loan. 

Don’t get yourself into a trap where you take out a credit card cash advance but still only make your minimum payment. You may find out that your bill goes up due to the accruing interest on your loan. 

Merchant Cash Advance 

The best news for business owners is that cash advance loans are not just for individuals. Businesses who find themselves needing a little extra cash can breathe easy knowing that help is available. 

When looking for a merchant cash advance, the business will need to prove their ability to repay with online sales, receipt history, or future sales trends. 

Even businesses with bad or less than perfect credit are encouraged to apply if needed. Sales fluctuate and some months are better than others. This reason alone is why merchant cash advance is a great solution. 

Cash Advances Are a Lifeline

Despite what may be reported in the media, cash advances are a lifeline when you need it most. 

So, rather than wonder what is a cash advance loan, do some research. From medical emergencies to sudden car repair, they are there to help get you from one week to the next.

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