The Facts about Cash Loans
All of the facts a borrower should know about cash loans are included below. We'll explain what a cash loan is, how you can get one, and what the pros and cons of short-term borrowing are.
Cash Loans Explained
Simply put, a cash loan, or a payday loan, is a small amount of money that a lender advances a borrower for a short period of time. These loans are popular because most payday lenders do not look into their customers' financial histories. Most borrowers use got cash loans to handle emergency expenses before their next paycheck. Payday loans usually must be paid back within a few pay periods, though all lenders have different terms. With most cash loans, the borrower must give the lender an authorization to debit the borrower's account for the amount owed on the loan's due date. This is the electronic equivalent of writing your lender a post-dated check in exchange for a loan.
How the Process Works
The cash loan borrowing process is best explained with an example. Remember that all of the numbers, terms, and charges included in this example are for illustrative purposes only.
The terms and rates of your individual cash loan will likely be much different. Let's say that you need $400 to repair your car, and you decide to borrow the funds from a payday lender. You give your lender a debit authorization on your bank account for $460 to include finance charges. The lender puts the funds in your account, and you've got cash until the loan's term is up. When the term expires, the lender will automatically debit your account for $460. If you don't repay in full on the due date with most lenders, you'll be assessed extra fees and charges (varies by lender).
Pros and Cons of Cash Loans
What borrowers tend to like most about cash loans is their speed and convenience. You'd be hard-pressed to find a loan that you can get as quickly and simply as a payday loan. These kinds of loans are also ideal for borrowers who don't have access to credit cards or personal savings. On the other hand, if you got cash from a payday lender, you would have to pay exorbitant interest rates because the terms of the loans are so short. The average APR for a payday cash loan is about 400% (varies by lender). The interest charges will accumulate even more rapidly if you don't pay on time. Rolling your cash loan over, or electing to pay at a later date, will result in additional fees and interest charges (varies by lender).