The Pros and Cons of Cash Advancement Loans

Introduction

Cash advancement loans have been helpful in so many ways in the past and even until this moment. People have been rescued from difficult financial challenges through this means. Several people have been beneficiaries of the advantages of this loans. This has made so many people thankful for the initiative. However, cash advances have been condemned to some extent by a substantial group of people over the years. This disapproval is due to the fact that Cash Advancement loans have been found to encourage scenarios where people are not totally reliant on loans at almost every stage of their lives and businesses. As a result of this, they are not able to bounce back as regards their finances and find it difficult to recover from the debt incurred. 

There is a long list of reasons why people take cash advancement loans. People may need cash advances to settle their debts, or even need it to clear the debt as on a different debit card. Regardless of the reason whatsoever you may be in dire need of cash now or in the future, then this article is for you. This article breaks down the basics of cash advancement including the pros and cons of cash advancement loans. 

What are Cash Advancement Loans?

Cash advancement Loans are short term loans that are given to you by your credit card company. The aim of these loans is to give customers a chance to make use of the credit available to borrow some money for a particular period of time. The consumers are then required to pay back the loan with extra fees and interests on the amount borrowed. For you to get a cash advancement loan, the money will be deducted from the remaining limit of your credit card. 

The limit you can get for cash advancement loans will be decided by your credit card company. This cash advance is usually a fraction of your credit card limit. As long as the cash credit on a customer’s card is still available, the customer will always have access to cash advancement loans. If the cash credit on the card has reached the limit, then the customer will no longer have access to the cash advancement loans. 

For the sake of this article, we have curated the list of benefits and downside of cash advancement loans. This will help people make the right financial decisions when in dire need of cash. 

Advantages (Pros) of Cash Advancement Loans

This is for the purpose of listing out the major ways in which people have benefited from getting cash advances.

Quick means to get cash 

This may be one of the most crucial advantages of cash advancement loans. When you are able to get a cash advance as soon as you need it. It is quick, easy and comes promptly, almost immediately you apply, you get fast access. You will not need to go through the stress of joining a long waiting queue in the banking hall. There is no need to wait for the bank to open before you have access to loans. You get a prompt reply as soon as you request for an advance. You are either given the money immediately or you get the money transferred to your bank account (whichever way it goes).

No delay in approval 

Another advantage of cash advancement loans will be that credit is usually not a major deciding factor for the cash loan to be authorized or endorsed by the appropriate body. Since the purpose of applying for the cash advance is because you have limited cash present in your credit card account, you do not necessarily have to request for a new advance to have access to it. 

Little or no paperwork needed

Thirdly, when you are applying for a cash advancement loan, there is not much paperwork to be done. It’s quite an easy and seamless process. You may not even need to wait for the bank to resume before you can access a cash advance. 

No collateral involved

For you to get access to cash on a loan basis from organizations involved in this, you will need to at least tender proof of a collateral. Collateral stands as a security pledge to the lender so he is sure of the repayment of the loan. However, in the case of cash advancement loans, you do not have to provide any of this. It doesn’t matter how big or small the amount is as this does not have any effect on the process.

Disadvantages (Cons) of Cash Advancement Loans

The fact that several advantages are stated above, it does not rule out the fact that there are no downsides to cash advancement loans. It is advisable to have a good knowledge of the possible problems or challenges associated with the loans. Here are some cons you should put into consideration before you go ahead to make a decision. 

High percentage of interest rate

Having easy access to borrow money in advance comes with its own high cost. Sometimes you will have to pay a high fee and interest on the cash advancement loan. You might have the notion that it shouldn’t cost so much, but there is a high price to pay. This should be considered. This interest rate may be more worthy of attention that you envisage. Some companies who provide cash advancement loans may require you to pay back up to 15% of the full amount you borrowed. This is outside the interest that you are required to pay back. A total of this can be aiming for close to 100% or even more of the total amount that was borrowed.

No long term loans 

This is another disadvantage of the cash advancement loans. You can only have them for a short period of time. There is availability of long term loans. This simply means that you must find a way to pay back as fast as possible. The payback period is usually within a space of one to two weeks without having some considerable repercussions. In the case of paying the loan later, you stand a chance to repay at a higher interest rate.