Cash loans are short-term loans you can borrow that provide you with quick access to cash. This process is possible and can also be achieved without the need for extensive paperwork or long waiting periods.
Furthermore, these loans are designed to solve urgent financial needs, such as medical bills, car repairs, or unexpected expenses. This is one feature that makes them a popular option for individuals in need of fast funds. However, while cash loans are convenient, they often come with high interest rates and fees. So, understanding more about these loans can help you make better and more informed decisions.
What Are Cash Loans?
Cash loans are a form of unsecured personal loan designed to offer borrowers quick access to funds. The funds are typically small, with amounts ranging from $100 to $5,000. Also, they are usually repaid over a short period, often between two weeks and one year.
In addition, the lenders only base approval on the borrower’s income rather than their credit score, making cash loans more accessible to individuals.
Types of Cash Loans
Cash loans vary and usually come in different forms. Knowing what they are and how they work can help you make a better decision on the one that best suits your needs. The types of cash loans include:
Personal Loans
Personal loans are one form of cash loan that offers more flexible repayment terms compared to payday loans. Borrowers can easily access larger sums of money, ranging from $500 to $5,000 or more. However, this depends on the lender and they are repaid in installments over several months or even years.
Furthermore, Personal loans typically have lower APRs than payday loans, with rates ranging from 10% to 36%.
Payday Loans
Payday loans are short-term cash loans that are typically due on the borrower’s next payday. Moreover, these loans are usually disbursed in small amounts, ranging from $100 to $1,000. Plus, they are usually intended to cover immediate financial needs. These loans have very high annual percentage rates ranging from 300% to 500%, which can make them extremely expensive if not repaid on time.
Installment Loans
The Installment loan allows borrowers to repay the loan over a set period in regular installments. These loans can range from $500 to $5,000 or more and they often come with fixed interest rates. This means that the borrower pays the same amount each month. Moreover, installment loans have APRs that range from around 5.99% to 35.99%, depending on the lender, loan amount, and borrower’s credit profile.
Title Loans
A Title loan is another type of cash loan that allows borrowers to use their vehicle as collateral to secure a loan. Title loans typically carry APRs between 100% and 300%. However, with this type of loan, you may lose your vehicle if you don’t pay back on time.
Pros of Cash Loans
Here are some of the benefits that is associated with a cash loan:
- Cash loans are known for their fast approval and disbursement process. Borrowers can conveniently receive their funds on the same day or within 24 hours.
- Lenders usually have lenient approval criteria, often requiring proof of income rather than credit history.
- Additionally, borrowers can easily use the funds for any purpose, whether bills, emergencies, or personal expenses.
With their fast approval and varying purposes of the loan, you can conveniently take out a cash loan that can solve your emergency demands.
Cons Associated With These Loans
Here are also some of the potential risks you face when you borrow a cash loan:
- Payday and title loans can come with exorbitant interest rates, leading to higher repayment amounts.
- Due to its short terms and high fees, some borrowers may find themselves in a cycle of debt, borrowing more to repay the previous loan.
- Similar loans, like the payday loan, must be repaid in a short time frame. Eventually, this can really strain borrowers financially.
You can look at these risks and carefully consider these factors as well before you make a decision.
Requirements for a Cash Loan
It is easy for anyone interested to qualify for a cash loan compared to traditional loans. However, even lenders still have certain requirements. Here are some common criteria:
- Proof of Income: The lenders will need to see that you have a steady income to ensure you can repay the loan.
- Identification: Another requirement is a valid form of ID, such as a driver’s license or passport.
- Age Requirement: The borrowers must be at least 18 years old to qualify for a cash loan.
- Bank Account: Many cash loans require an active checking account where the loan amount can be deposited and repayments can be made automatically.
Interest Rates and Fees Associated
The interest rates on cash loans tend to really be high compared to traditional loans due to the short-term nature and the risk lenders take. Here’s a breakdown of typical rates for the different types of cash loans:
- Payday Loans: APRs range from 300% to 500%, with fees between $10 and $30 per $100 borrowed.
- Personal Loans: APRs range from 10% to 36%, depending on the borrower’s credit score.
- Installment Loans: APRs range from 5.99% to 35.99%, depending on the lender and borrower.
- Title Loans: APRs range from 100% to 300%, with the risk of repossession if the loan is not repaid.
Alternatives to Cash Loans
While cash loans offer really swift financial solutions to our needs, it can come at a really high cost. So, before opting for a cash loan, consider some alternatives:
- Credit Union Loans: Many credit unions offer small, short-term loans at much lower interest rates than payday lenders.
- Credit Card Cash Advances: This option can also be expensive; still a cash advance on a credit card often has lower rates than payday loans.
- Borrowing from Family or Friends: This can provide immediate cash without the high interest rates and fees associated with these loans.
You can easily check out these options and settle for one as your alternative. If none of these options favor you, then, you can proceed to take out a swift cash loan.
Frequently Asked Questions
Here are some frequently asked questions you can check out:
How fast can I get a cash loan?
Cash loans are usually processed quickly, with the funds available the same day or within 24 hours of approval.
Do cash loans affect my credit score?
As long as the lender does not perform a credit check, the loan will not impact your credit score directly. However, failure to repay the loan could result in collections, which would affect your credit.
Can I get a cash loan with bad credit?
Yes, you can. Many lenders offer cash loans to borrowers with bad credit. However, the interest rates will likely be higher.