You may have heard of a cash advance a couple of times. However, do you know what it is about? Just as its name suggests, you can assume that it is an easy way to get cash. However, even though you will get the money in advance, remember it will incur some interest and fees based on the repayment plan.
Therefore, before taking up a cash advance, ensure you are familiar with all its terms. Most reputable money lending companies like On Line Credit Pte Ltd offer some great rates when it comes to a cash advance.
Only take up a cash advance when you are in dire need of funds and you don’t have an alternative. You can borrow from your family and friends, lending circles, or take a personal loan instead.
What Is A Cash Advance Loan?
A cash advance loan is a short-term loan that is provided by a credit card issuer. When taking a cash advance, you are being given money against your credit card. The cash advance can be given in different ways.
For starters, you can go to an ATM and get a cash advance there. However, there is a limit that you can borrow. Once any cash is received on your credit card, it gets deducted immediately.
The other option is to visit the bank and get a cash advance from there. In the case that your credit card has a convenience check, you can write a check to yourself and cash or deposit it.
Some cash advances tend to be expensive due to the cash advance fees, ATM or bank fees, and interest rates.
he Cash Advance Terms and Fees
It is based on:
- Cash advance APR
- Cash advance fee
- ATM or bank fee
- No grace period
- Separate credit limit
The Different Types of Cash Advances
1. Credit Card Cash Advances
When you have a credit card, you agree with the bank or financial institution on how much your credit card limit will be. It is a short-term loan and the borrower can get cash of up to 20% – 50% of the limit. However, it all depends on your limit.
2. Merchant Cash Advances
The merchant cash advances are the ones given to small business owners based on their current sales and what they project. Therefore, the financial institution evaluates the capability of the business and through that, it will be easier to get the right funds. However, as a business owner, you need to provide all the required details.
3. Payday Loans
These are loans given with the hope that when you get paid, you will return the money. The funds can be accessed online or at a physical location. However, before you get a payday cash advance, you must provide proof of a regular income.
The Relation between a Cash Advance and Credit Score
Well, the cash advance, doesn’t affect your credit score or credit history. However, it will be added to your credit card debt. Therefore, if you fail to pay on time, it can affect your credit score by a huge percentage.
Also, your credit score can be affected if you have a high-level interest in your credit card. Just ensure you pay on time to prevent this.
When Can Taking a Cash Advance To Be the Right Decision
Taking a cash advance can only be right for a few reasons
1. Build Your Credit
At some point, you might find that your credit history or credit score is a bit wanting. You can decide to take up a cash advance to ensure you rebuild it.
However, that shouldn’t be the only alternative, you can also consider getting a personal loan that you can use for different reasons. A cash advance can come in handy here.
2. High Debt To Income Ratio
Even if taking up loans is not the best alternative, when you have a high debt-to-income ratio. The best alternative would be taking up a cash advance.
This is because it will be hard to get a personal loan or any other kind of loan. Unfortunately, there are certain fees you will incur when getting the cash advance.
3. As The Last Resort
If you don’t have another alternative, then you can consider getting a cash advance. Therefore, try to do enough research to compare the rates and the amount that you will pay at the end. If it is an emergency, visit your trusted moneylending company and get the assistance needed.
4. If You Are Capable To Pay It Soon
You can also take a cash advance if you can pay it fast. It might be that you are expecting some money after a while, but not immediately, this can allow you to take a cash advance to help cater to your current needs.
If you can pay the money right away, then consider taking a cash advance loan.
5. Favorable Terms
It is also convenient to take up a loan when there are favorable terms. This can include the repayment duration, how you are to pay it, and the interest that you will need to pay.
Therefore, once you agree with it, try and take the loan. If you pay off the loan fast, the interest rate won’t be that much. Just do your research well.
Finding the right loaning company can be frustrating. However, when you form a good relationship with a credible money lending company, it becomes easier. However, just ensure you present the required documents to the money lending company and all will be well.
However, if you are sure that you won’t pay back the money soon, try and look for an alternative. You don’t want to pay up a large interest rate that even surpasses the principal amount that you took. Just ensure you do your research well. When in Singapore, you are assured of a diversity of licensed money lending companies.