Types of cash advance loans you should know
If you’re in a financial pinch, knowing all of your funding options to solve your current problem is important if you want to get out of that situation. Normally, one would resort to applying for a traditional loan from the bank. However, if you need quick cash and your credit score is less-than-stellar, you might want to go for alternatives like cash advance loans.
Cash advance loans are easy, fast, and reliable, especially when you’re in need of immediate funds. But first, let’s talk about this loan type in depth.
What is a cash advance?
Generally, cash advance loans are offered in traditional banks and alternative lenders. The term could also be applied to a service that you can get from your credit card issuer against your available credit. However, you should note that cash advances typically have steep fees and interest rates, but they are popular since they are fast and easy to obtain.
Let’s take a look at a credit card cash advance, for example. In a credit card cash advance, you’ll be borrowing against your line of credit. The amount you can borrow depends on your available credit, and the cash advance itself has a different interest rate. Fortunately, you can pay for both at the same time. When you get approved for one, there are a few ways for you to get the money.
The first one is through an ATM. If you use a PIN for your credit card, you can directly go to an ATM to get a cash advance. However, if your card doesn’t require an ATM, you can ask your credit card issuer for one. Take note that it might take a few business days before your PIN arrives.
Also, if your credit card came with convenience checks, you can use those to write yourself a check to cash it or deposit into an account. If you find those options bothersome, you can just walk into the bank to collect the cash.
So, what are the types of cash advances available? Here are some of them:
Credit Card cash advance
Credit card cash advances are the most popular type of cash advance out there. It’s simple and very fast. If you only carry a credit card for your day-to-day spending, then you must have already encountered a lot of problems in terms of payment.
Not all vendors and shops accept credit cards, so you might need cash for payments. In this case, a cash advance becomes a huge help. If your credit card has a PIN, you can directly go to an ATM and get a cash advance.
If you don’t want to do that, you can go to a nearby bank with your bank’s payment network, like a VISA or Mastercard. Just remember that you need a valid ID for the transaction. Also, you need to remember that most banks nowadays don’t allow for the whole credit line to be made into a cash advance. Typically, a credit card cash advance is capped at a few hundred dollars.
Merchant cash advance
If you’re a small business owner and currently in need of extra money to keep your business afloat, then a merchant cash advance can be helpful. A merchant cash advance is a type of business funding that helps businesses gain access to money.
The bank or lender will give your business the money it needs, and your business will pay it back with its next income. That said, a merchant cash advance is very beneficial for businesses that have little assets and cash flow.
So, how does it work? A merchant cash advance provider gives the business money and gets it back via the business’ card payments. With this type of cash advance, the lender monitors your business’s cash flow through a terminal provider. This means that the lender doesn’t have to do a credit check to approve your business for a merchant cash advance.
A payday loan is a type of borrowing option where a lender offers you a high-interest loan to be paid later with your salary. Its principal amount is generally based on your income and typically has a very high-interest rate.
Of course, lenders who do this are in the minority. But generally, payday loans are fast and easy, and as long as you pay the cash advance on time, you can avoid the other additional costs for the late payment.
There are a few more types of cash advances that are not included in this article. However, the ones that make the list are the easiest and fastest ways to obtain a cash advance. Just remember to find one from a reputable lender to ensure that the transaction is clean and fast.
Story by Millie Copper