The way that a cash advance is going to be useful is in an emergency. That's because these are short term loans that you can take out quickly. Of course it would probably be better if you could get the money from a family member or friend, but if that's not possible then cash advances and payday loans are going to be just about the only choices you have. We'll be going through how they work here.
How Cash Advances Work
To put it simply then, all you really need to know about a cash advance is that it's a short term loan which you're going to have to repay when you next get paid from your job. That's why it has it's name, because it works in a very similar way to just getting an advance on your salary. Only you also have to pay interest as it is a loan really.
In terms of whether you are going to be approved for a loan like this, the answer is that as long as you can afford it from a single month's pay then you should be fine. It's crucial to understand that it usually does have to be a month's pay though, you probably won't qualify if you get a weekly salary.
How do you make the application? Well it's the internet age now so it should be no surprise that you can do it online. It's all going to be very simple, you'll have to fill in some personal details of course, and also employment details. The most important questions, as already mentioned, will be to do with how much you are paid and when you get your pay.
The reason that it's important that you get a monthly salary, rather than a wage every week for instance, is because these loans have been designed to last for about a month. That is what the interest rate and the amount you can borrow is based on. However with that said, you could take out a loan like this with just a day before you get paid if you want to.
The Interest Rates
When it comes to how a cash advance works, the place where there is the most confusion has to do with interest rates. This is mostly based on the fact that the APR is usually advertised so prominently, as the law demands. The reason that's a problem should be quite obvious. The APR measures how much interest has to be paid in a year, whereas cash advances are only supposed to last for a month.
It should be very clear just from these simple definitions of what cash advances are and what the APR measures as to why the APR is not a good way of measuring this kind of loan. After all, are you going to be concerned about how much interest you would have to pay over 36 years if you were just getting a 3-year loan? Of course not, but that is a precise analogy of what is going on here.
If you want to know how much interest you are actually going to be charged it shouldn't be too hard to find that information on the site of the lender. Normally though it is going to be around 25%, if they are offering a good rate. As this is a short term loan though, and not long term, that rate will increase quickly if you don't repay on time.
Most people are going to be very careful about repaying this kind of loan on time so as to avoid higher interest rates being applied. Without that safeguard, people would be able to treat these kinds of short term loans as long term loans, and that would mean that the lender would have to make a lot more checks. At present they don't make credit checks for instance, because anyone who applies should be able to make the one payment necessary to pay off the loan. This means they are useful in emergency when you need money quickly.
How Cash Advances Work
To put it simply then, all you really need to know about a cash advance is that it's a short term loan which you're going to have to repay when you next get paid from your job. That's why it has it's name, because it works in a very similar way to just getting an advance on your salary. Only you also have to pay interest as it is a loan really.
In terms of whether you are going to be approved for a loan like this, the answer is that as long as you can afford it from a single month's pay then you should be fine. It's crucial to understand that it usually does have to be a month's pay though, you probably won't qualify if you get a weekly salary.
How do you make the application? Well it's the internet age now so it should be no surprise that you can do it online. It's all going to be very simple, you'll have to fill in some personal details of course, and also employment details. The most important questions, as already mentioned, will be to do with how much you are paid and when you get your pay.
The reason that it's important that you get a monthly salary, rather than a wage every week for instance, is because these loans have been designed to last for about a month. That is what the interest rate and the amount you can borrow is based on. However with that said, you could take out a loan like this with just a day before you get paid if you want to.
The Interest Rates
When it comes to how a cash advance works, the place where there is the most confusion has to do with interest rates. This is mostly based on the fact that the APR is usually advertised so prominently, as the law demands. The reason that's a problem should be quite obvious. The APR measures how much interest has to be paid in a year, whereas cash advances are only supposed to last for a month.
It should be very clear just from these simple definitions of what cash advances are and what the APR measures as to why the APR is not a good way of measuring this kind of loan. After all, are you going to be concerned about how much interest you would have to pay over 36 years if you were just getting a 3-year loan? Of course not, but that is a precise analogy of what is going on here.
If you want to know how much interest you are actually going to be charged it shouldn't be too hard to find that information on the site of the lender. Normally though it is going to be around 25%, if they are offering a good rate. As this is a short term loan though, and not long term, that rate will increase quickly if you don't repay on time.
Most people are going to be very careful about repaying this kind of loan on time so as to avoid higher interest rates being applied. Without that safeguard, people would be able to treat these kinds of short term loans as long term loans, and that would mean that the lender would have to make a lot more checks. At present they don't make credit checks for instance, because anyone who applies should be able to make the one payment necessary to pay off the loan. This means they are useful in emergency when you need money quickly.
About the Author:
If you are interested in obtaining emergency cash, and you want some additional info about getting it, David Davies also frequently writes at cash advance.
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