A cash advance loan is a high-risk short-term loan obtained to cover small expenses, such as home or car repair, medical bills, utilities, rent, or various unforeseen costs. As a rule, individuals apply for this financing option through online lenders, which help avoid dealing with a lot of documentation. A cash advance loan online is typically repaid in one lump sum, including interest rates and extra fees, by the borrower’s next paycheck.
Before applying for this type of loan, it is essential to remember that it is one of the most expensive borrowing options, with interest reaching 400% APR. Borrowers typically need to pay an extra $10-$30 for every $100 borrowed. Therefore, if you apply for a $300 loan, be prepared to pay $330-$390.
One of the main advantages of this type of loan is that it allows people to borrow money even with bad credit scores. Lenders don’t conduct hard credit checks, reporting to major credit bureaus (Equifax, Experian, and TransUnion). Instead, they perform only a soft credit check to make a loan decision, focusing mainly on people’s incomes instead of credit rating. Therefore, applying for cash advance loans doesn’t hurt your credit score.
As a cash advance loan is considered a high-risk borrowing option, it is essential to choose a reliable lender. Before applying, you should compare various loan offers, paying attention to their interest rates, loan terms, and other conditions.