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Cash Advance Loans
“Cash advance” is now seen a lot in different places. You are likely to see it advertised on window stores or in magazines that you come across. Cash advance refers to loans offered by online or storefront lenders.
You may not always find “loan” attached to it, but it refers to the same thing. Cash advance loans ensure that you have a quick influx of cash to support your finances. Cash advance loans are sometimes seen as payday loans in disguise.
How do cash advance loans work?
Cash advance loans are similar to payday loans. You get the loan by writing a post-dated cheque of the amount you owe to the lender so that at the time to repay (when you are paid), the lender can go in and cash the money. After this, you can have the loan amount you are looking for. At your next payday, the lender will reclaim the amount.
Am I safe to go in for cash advance loans
Going in for cash advance loans is not a bad idea. The only thing to remember is that when the time is due (which is usually in some weeks) you will pay back what was borrowed. This payment will include the interest and other fees attached to the loan all in a lump sum.
Truth be told, cash advance loans do come with some risky attachments. You can spend about $520 in fees for borrowing a $375 advance. Also, it has been found out that the repayment of cash advance loans takes up to 36% of the average borrowers’ paycheck.
The decision to choose cash advance loans depends on the borrower entirely. If you can afford it and you are tight up for cash and need a fix it’s a viable option.
What lies ahead when you cannot pay back cash advance loans
When you are not able to pay back cash advance loans taken, lenders can give you the option of rolling it over. The lender will extend the payment time by some weeks together with the interest that was agreed upon.
But extending could mean you are likely to pay 30% interest if you were already owing 15% interest on the first loan that you took.
It has also been noted that 80% of cash advances are either rolled over or another is taken before the 15th day of taking the first loan. This can sometimes make it difficult for people to choose cash advance loans.
If you feel uncomfortable with rolling over the loan, you should prompt your lender so that you find alternative ways of repaying the loan.
Types of cash advance loans
1. Credit Card Cash advance
Credit card cash advance are loans given by credit card companies. You borrow money from your credit card and then pay back with the interest and fees that come with it. Credit card cash advance caters for expenses that cannot be charged to your credit card like your rent.
You get credit cash advance by going to your banks ATM and using your card to borrow money. The money you withdraw will be added to your credit card bill. It’s similar to making purchases with your credit card but this time the money you are getting is not coming from your own bank account.
The credit card company has given you a loan and you are therefore required to pay back. The interest accrues the more you take a longer period to pay back this type of cash advance loans.
Credit card cash advance loans have no grace period because the interest begins to accumulate the moment you borrow. The interest rate is admittedly higher than if you used your credit card to make purchases (usually around 20% and above).
Credit card cash advances are better than cash advance loans from payday lenders. They’re still expensive though and should be the last resort if all other options are exhausted.
2. Employer Cash advance
Employer cash advance loans are sometimes not described as a loan entirely. This is because the money you receive comes out of your own paycheck.
Not all employers will give cash advances and there are strict guidelines on the number of times you can request for such funds. You can get employer cash advances by finding out from either your co-workers or the Human Resource office so as to avoid creating an awkward situation.
Employers are not under obligation to provide an advance for you in dire situations hence this inquiry will be of importance. An employer cash advance will require some paperwork to make the arrangements formal and to avoid any misunderstanding.
This may include stating the reason why you need the cash advance and when the money will be deducted from your paycheck when it comes. This type of cash advance loan can be good because it gives you an interest – free form of borrowing but not all companies will offer this except in emergencies.
Other affordable options to cash advance loans
There are other options to cash advance loans that you can consider. These include borrowing from friends and family or taking a personal loan from the bank.
Asking for financial help for a temporal situation or any situation for that matter from family and friends can be a bit difficult.
The most important thing is to state clearly why you need the funds and how you intend to repay. This can be stated in a contract so as to manage the expectations between you and the one you took the loan from.
With personal loans, banks and credit unions can give you the loan that you need as an option against cash advance loans. Some banks may require that you have a good relationship and standing with them before you get such loans.
However, there are lenders who are prepared to overlook the fact that you may not have a relationship with them nor a good credit score to offer personal loans to you. The task ahead is to search for these lenders on the market.
To conclude, its best to have an emergency fund for hard times. An emergency fund is an amount of money that you have set aside for emergencies or unexpected expenses. Financial advisors have said that it is important to have enough money to cover up to 3 -6 months expenses. The unforeseen expenses can range from residency, health, career, family etc. You should be prepared enough for these occurrences.
Disclaimer: All loans offered through this website are subject to credit and underwriting approval. AfterLoans.ca is a lead referral company, not a lender. AfterLoans only works with financial service providers that adhere to Canadian laws and regulations. You can borrow up to $20000. Loans amortization is between 6-36 months. APRs range from 19.99% to 55%. The actual APR charged will depend on the lender’s assessment of your credit profile. For example, on a $1000 loan borrowed for 12 months at 29.9%, the monthly payment will be $97.24; with a total repayment, including interest, of $1166.88 There is also lender’s optional loan protection policy. In the event of a missed payment an insufficient funds fee of around 45$ may be charged (dependent on the lender). If you default on your loan payment plan the lender may terminate the plan and the remaining balance will become payable immediately. Our lenders employ fair debt collection practices, but will pursue the payment of Outstanding debts to the full extent that Canadian law allows.