A cash advance is the best bet to make when you need quick cash without getting involved in too much document processing and verification, provided you’ve availed of the right kind of cash advance facility. As there are various kinds of this loan, the borrower might get confused about which one best suits their needs.
In this post, we’ll help you learn about the key types of cash advances to ensure you make the right choice.
What Is A Cash Advance?
A cash advance is a type of short-term unsecured loan that one can avail from banks, online lending networks, credit card companies, and online brokers for loans. This type of loan is different from the conventional loan in that it doesn’t require credit score verification, heavy document processing, and collateral.
Because of this, the entire loan process is faster. Depending upon the type of cash advance you’ve availed, you can get cash immediately in your hand or in your account. This is why most people get a cash advance when there is a financial emergency.
Types of Cash Advance
As mentioned above, many varieties of cash advances exist. Knowing them in detail will help you find out which type is suitable for you. Hence, we present you with a crisp overview of all these types.
- Merchant Cash Advance
This type of cash advance loan is mostly used by small businesses when a conventional loan isn’t much help. Without digging deeper into credit score details, merchant cash advances provide instant credit for bad credit holders. Companies that bank on debit and credit card sales can use a merchant cash advance to fix any emergency funds.
The lender won’t ask for cash. Hence, you can use the credit to stabilize the cash flow or purchase any tool or technology. The only thing that will sound interesting to the lender is the stability of the business. The lender might inquire about the past performance of the lender to make sure that he is investing funds in the right kind of business.
It’s worth noting that interest rates are often higher in the case of merchant cash advances. But, approval is way too easy. Before one avails of the merchant cash advance, it’s worth understanding that both the lender and borrower will enter into a legal agreement that will feature the repayment terms, rate of interest, and other crucial details.
In some cases, the lender asks the borrower to pay back a certain amount of cash from the daily revenue earned. It goes on until the full amount borrowed with interest is paid.
- Credit Card Cash Advance
With a credit card cash advance, it’s easy for you to withdraw cash using your credit card. The withdrawal amount can’t be more than the credit card limit. Don’t try to consider it the same as a debit card money withdrawal. In debit card money withdrawals, the funds are deducted from the savings account.
But, in credit card cash advances, the money is provided by the credit card company. There is no fund deduction. Basically, it’s like taking a loan from a credit card company against the credit card limit.
This type of cash advance is influenced by factors like transaction fees, the duration for which an interest-free loan is provided, and the yearly percentage rate. Make sure you know about all these things beforehand. These details can be easily obtained from the credit card company.
You should go with this option when you need immediate funds and cash. All you need to do is go to the nearest ATM, enter the credit card, and get the money. You will have instant cash in your hand.
- Payday Loan
A payday loan is an unsecured cash advance that will help you get instant cash without any risk or collateral. They are used for small amounts of borrowing that have to be paid back on the day the borrower receives the salary. Interest rates are generally high. But, the processing is quick. One can get cash in hand if the right kind of lender is spotted.
Funds emergencies can show up at any time and we all must be aware of the ways that will help you get instant cash. A cash advance is a verified way to obtain instant cash. Using your credit card, you can have cash in your pocket in the least possible time.
As there are various types of cash loans, it’s crucial to find out which one works best for you. The post explored multiple cash loan types and related crucial details. Pay attention to them and make a wise choice.