What Is a Cash Advance.
A cash advance is an unsecured loan provided by money lenders. As the loan is unsecured it usually attracts very high interest rates and are normally provided over a short term. They can range from credit cards where the loan can be taken from an ATM machine at interest rates of up to 30% all the way down to a personal loan from a friend or family which normally attracts no interest at all. Bottom line is that they do have to be repaid and provided the borrower is diligent and intelligent about their use, they are a safe and convenient way out of a short term cash squeeze.
Main Types of Cash Advance:
l Credit Card: The most popular form of cash advance is through credit cards. As with any loan they should not be used if the borrower has any doubts about their ability to repay in the desired time frame. Apart from a large difference in interest rates from one carrier to another, there are normally large fees involved in taking a cash advance from a credit card compared to a purchase. Most providers offer benefits such as discount at certain stores and free airline and travel bonuses. Credit card providers only start making a profit when borrows begin to roll over or not pay their loans on time. This is something borrowers need to remember.
l Pawn Broker: Pawn brokers will give a cash advance against something of value, such as jewelery or electrical items. They hold the item for a predetermined period of time until the owner can repay the loan plus interest and recover their item. If the loan is not paid in the desired period of time the pawn broker recovers their money by selling the item.
l Payday Loan: This type of loan has become very popular because of it’s ease of access and the fact that the lender has first draw on the borrowers next pay check. They rarely can get into financial difficulty with this type of loan because the lender simply draws the repayment from the next pay day, and it’s done. They can be obtained quickly online from many companies and are always short term loans, usually no longer than two weeks. This is a perfect and safe way through a financial tight spot.
Safe or Dangerous?
Most situations in life are dangerous if they are not maintained in the appropriate fashion. No different with a cash advance. Provided people do not borrow above their means to repay. Provided they make their repayments on time and determinately do not rollover their loans, it is an extremely safe and stress free short term way to overcome unexpected circumstances that may strain the budget.
