People sometimes need more money than they have to pay bills and meet certain needs until their next paycheck.
The quick solution to this situation is to get a cash advance. It is therefore important to know the steps that need to be taken to increase your chances of accessing one. Visit US Bad Credit Loans to get loans with bad credit.
What is a Cash Advance?
A cash advance is a short-term loan obtained from a bank, credit card issuer, or alternative lender. They are commonly known for having high-interest rates but are also known for being relatively easy to acquire.
Types of Cash Advances
The four main types of cash advances operate slightly differently, so it is important to understand these differences and pick what works best for you. They are listed below:
- Credit Card Cash Advance
- Payday Loango to check cash advances now
- Installment Loan
- Merchant Cash Advance
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Credit Card Cash Advances
These are easy to obtain. With a credit card, you can go to the bank or ATM to withdraw money from your credit limit the same way you would withdraw money with your debit card from your account balance. Or, you can request a convenience check from the credit card issuer.
If you need cash to purchase goods or services, purchasing them with your credit card is wiser than withdrawing the cash.
Debt from credit card purchases does not begin to accrue interest immediately. There is usually a grace period of about 30 days.
On the other hand, credit card cash advances begin to accrue interest immediately. And the interest rates are usually significantly higher than those for credit card purchases.
Cash advances are not low-interest loans. Besides the interest, there are other fees incurred in the process of taking out money from an ATM.
It is also important to note that the cash advance credit limit is usually lower than your actual credit limit. You cannot take out your credit limit as cash.
These short-term or high-interest loans are meant to be paid back with the borrower’s next paycheck. The lender sets the interest rates according to state regulations without really considering the borrower’s credit score.
This is good for people with low credit who cannot get loan approval from banks. But the high-interest rates should be put into consideration before opting for one.
If you are unable to pay it back by your next paycheck, the debt will roll over with even higher interest, making it easy to get stuck in a debt trap.
Some organizations also offer payday loans to their employees at little or no interest. This is always a good option.
Installment loans are less easily accessed as you need a good reason and a high credit score rating to get one by conventional means.
They are those that are paid through successive part payments over an agreed period. These part payments are paid with interest.
Installment loans usually incur low interest and can span a long period of time, making it easier for borrowers to repay. Examples of installment loans are student loans, mortgage loans, etc.
Collaterals are usually needed to get such loans. Therefore, defaulting on payment can lead to the loss of collateral and can be really detrimental to your credit score.
Merchant Cash Advances
These loans are obtained by companies and merchants. Even though the business usually needs a high credit score to obtain a merchant loan from the bank, alternative lenders may use business data to determine the business’s creditworthiness. Points such as the amount the business makes from online transactions are considered.
The lender holds on to a percentage of the business’s credit card sales until the money has been paid back completely with interest.
How Can I Boost My Chances of Getting a Cash Advance?
Here are ways in which you can drastically improve your chances of getting a cash advance.
Choose a Lender That Is Well suited for You
If you want to get a payday loan with a low credit score, you can find it rather easily online. The lenders on the platform of some brokers are very strict with credit checks. You might not get a loan.
Some other brokers grant access to lenders who don’t really consider credit scores before approving a loan. Find the best brokers that offer loans without giving serious consideration to credit scores.
There are a number of lenders, be it an installment loan, credit card, or merchant cash advance. Make your search and choose the ones with less stringent loan policies. Although, generally, the less strict they are, the higher the credit rate.
Apply for As Little As Possible
Generally, the higher the amount you need is, the higher the income you’ll need to present. If your income isn’t very high, it gets harder to get approval.
You, therefore, have to cut out as many things as you can from your list of things you need the loan for. Only apply for the amount you absolutely need.
Keep Your Loan Term Short
Lenders are more comfortable with short-term loans. The longer the loan term, the higher the chances of an unforeseen circumstance. Short-term loans are more easily approved.
Get a Cosigner
This might not be so easy to get. You need someone who has a higher source of income and better credit than you do to cosign the loan. It has to be someone who really trusts you because of the risks involved.
Lenders find it easier to release a loan when there is a cosigner with a high source of income. This way, in the case of default in payment, they have more than 1 person to hold responsible.
If you do get a cosigner, be sure to return the loan as due. If not, your cosigner might be in debt and face a cut to his or her credit score. Don’t let them regret helping you out.
If you plan to get a cash advance anytime soon, these steps would greatly increase your chances of getting one.