Cash advances are short-term loans that help you quickly access the money you need. You can get them through your bank (against credit card limit) or through alternative lenders. When you’re withdrawing cash from an ATM, you’re essentially taking out a cash advance loan.
If you’re in a do or die situation, where getting the funds you need seems impossible, you may borrow using a cash advance skipping the wait of lengthy approval processes. However, they also come with high interest rates and fees which is something you should consider beforehand.
With credit card cash advances, there is no grace period and the interest starts accumulating the moment you take out cash. It also affects your credit score depending on your credit utilization ratio. So, are credit cards the only way to get a cash advance? No, that is just one way to get them; there are merchant cash advances and payday loans which work a little bit differently.
In this guide, you’ll get to understand how these fast cash loans work, how to get them, when it is okay to get them, and how to identify safer options for avoiding debt.
What Can I Use Cash Advances For?
Since cash advances are emergency cash loans you can use them to cover a variety of expenses that are either unexpected, or weigh too much on your monthly budget. Here are some examples:
- Debt consolidation
- Medical bills
- Car repairs
- Home improvements
- Wedding expenses
- Funeral costs, etc.
Types of Cash Advance Loans
As we already mentioned, cash advances aren’t just limited to credit cards. You can get them through other sources, often at better rates compared to a credit card cash advance.
1. Payday Loans
Payday loans allow you to borrow money for shorter periods (until your next payday) and repay them in lump sum on the due date. The funds can be used for any urgent expenses that require payments immediately, as payday loans are easy to get approved for (even with bad credit).
You can get these cash advances through an app or lenders (online or in-store). The interest rates are higher, often crossing APR (Annual Percentage Rate) of 400 percent! So, you must carefully understand the terms and fees before borrowing. It is best to turn to payday loans only when you are unable to qualify for unsecured loans with banks or your credit score is poor.
Want to compare the best payday loans online before settling for an option that suits you? Apply through our website for free with just an email and loan amount. You will be pre-approved with multiple lenders at lower interest rates and the option to select longer repayment periods.
2. Credit Card Cash Advance
If you have a credit card, you have the option to borrow money using its line of credit. You can do this simply by inserting your credit card in an ATM machine, and withdrawing out cash.
However, the interest starts applying immediately as we mentioned above and it is often higher than on the usual purchases you make from your card. You need to also be extremely careful about keeping the credit utilization ratio below 30% otherwise it can negatively impact your credit score.
It is therefore not the best option but you could surely go for it if you’ve run out of all other ways to obtain the money you require (borrowing from friends or family, using the credit card itself, etc).
3. Merchant Cash Advance
Businesses have the choice to opt for a merchant cash advance where they get the loan in a lump sum in exchange for a percentage in future sales. So, during emergencies businesses can recover from the loss while giving the lender access to deduct the owed percentage from their bank account. There are usually no collateral or good credit requirements for MCA loans.
Lenders don’t report to the credit bureaus so these loans are not going to help you build credit. Moreover, while they are faster to get, the high interest rates than traditional loans are something to consider.
Who Can Apply for a Cash Advance Loan?
The requirements for cash advances are subjective to different lenders and the state laws. Usually, anyone who is 18 years or older, has an active checking account, a government-issued ID, and verifiable proof of income can apply for a cash advance loan.
Additional requirements may include residence proof which may require utility bills or rental agreement. For showcasing an active income source, you can submit bank statements or pay stubs. And as for government ID proof, documents like driving license and passport work.
Most cash advances are no credit check, which means even if you have a bad credit score you can still apply and get approved. Some lenders may perform soft credit checks which don’t overall affect your credit score. To improve your chances of getting approved, you can try fast cash advance loans with no credit checks, instant approvals, and same day funding.
How to Get a Cash Advance Loan Quickly?
Perhaps the easiest way to get a cash advance is by applying through lenders online. If you wish to skip the hassle of finding lenders and applying individually through their website, you can always apply through our website. We filter out bad lenders for you and the service is free to use as well.
All you need to do is fill in the online loan application and you’ll be approved by multiple lenders in just a few minutes without having to go through extensive documentation processes. The funds are usually disbursed on the same day or the next business day in most cases.
And that is how to get a cash advance loan quickly.
Instant Approval & Same-Day Funding
Many lenders offer instant approvals for their cash advance loans, which means that without even submitting the necessary documents, you will be accepted for the loan. For reaping the benefits of same-day funds, try keeping all the documents ready for a smooth process.
How Can I Spot the Best Lender?
There are a few markers when it comes to choosing lenders that are safe and reliable. Here are the questions to ask yourself to know if a lender is genuine or not:
- Does the website mention contact details? If not, it may be a scam.
- Is the lender’s website encrypted? If not, your financial data might leak.
- Do you feel pressured to sign documents? That’s a red flag.
Risks & Downsides to Consider
When you’re evaluating your options, there are a few things to keep in mind before taking the cash advance or signing any documents for a payday loan.
- They come with high interest rates
- There are additional fees to pay
- Credit card cash advances impose interest immediately
- Prepayment penalties, late payment penalties are something to consider
- Repayment periods are often short
Final Thoughts: Should You Get a Cash Advance Loan?
Now that you know the ins and outs of cash advance loans, you’ll be able to make an informed decision for yourself. If you’re tackling emergency expenses and don’t have the funds, your paycheck is delayed, or you wish to avoid overdraft charges on your unpaid credit card balance it may be better to take out a cash advance.
Moreover, if you’re unable to qualify for a loan for traditional loans or it’s just for one-time use and you have a proper repayment plan in mind, it is okay to get cash advances. However, if you’re already in debt or have multiple loans to repay first, don’t add another to the burden as your credit score will only go down further.
Frequently Asked Questions
Yes, cash advances are loans that you borrow from either your bank using credit card or through payday loans.
When you use your credit card’s line of credit to take out cash, it is known as a cash advance.
Cash advances let you borrow money for emergencies and later pay back with interest.
You can get a cash advance through banks (by using your credit card to borrow money) or from alternative lenders (payday loans, app cash advances, merchant cash advances).
If you take out a credit card cash advance and the credit utilization ratio goes above 30 percent, it will significantly hurt your credit. However, with other cash advances like payday loans, your credit score won’t get affected as long as you pay back on time.
