How would you pay for an unplanned expense that costs $1,000 or more? If you don’t have savings or a lot of room on your credit cards, you might have to take out a cash advance.
An online cash advance is a convenient option in a financial crunch, available 24/7 online through simple and quick applications. And if approved, some lenders may send a same-day cash advance straight to your bank account.
According to the loan specialists at MoneyKey, a cash advance may act as an emergency stopgap when you fall short of what you need. But with a definition like that, you might mistake all online cash advances as the right fit for your emergency.
The reality is, cash advances come in all shapes and sizes, and they won’t all be the best option for you. The only way you can tell if you’ve found a good fit is by checking these three stats about your advance before you accept it.
1. Loan Size
How much money do you need? Better question, how much money can you get?
These two sums won’t always be in perfect harmony. Some online lenders may limit how much money they’re willing to lend, depending on your financial profile.
Cash advances tend to be on the smaller side of things compared to massive mortgages or auto loans. After all, you won’t be using them to buy a house or car outright. Cash advances are designed for minor unexpected car or household repairs, so you probably won’t get more than $3,000 online.
2. Repayment Terms
Your repayment terms let you know how long you have to pay back what you owe. This term also tells you the termination date of your loan. That’s the day you pay back off the last cent and close the account.
Online cash advances are considered short-term personal loans. That’s because they’re usually due back in less than a few years. Compare this to a mortgage, which may take most of your life to pay off.
Just how short these terms end up being is a critical feature of your advance. If you’re short on funds, a short timeline can put your budget through the wringer. There’s a chance you might not have enough cash on hand to hit your due dates.
Missing a due date is something you want to avoid at all costs, as you’ll earn more interest and pay late fines. Plus, your late payments might go on your official credit history and bring down your score
Every personal loan comes at a cost — whether you’re borrowing a cash advance, auto loan, or mortgage. It’s the cost of doing business with a lender.
The interest rate on your advance is perhaps the most important fee involved in your loan. It’s calculated as a percentage of your loan amount, and it gets added to your principal according to a set schedule. Depending on your lender, interest may accrue daily, monthly, or yearly.
This number may differ depending on the lender, your finances, and the economy. That means you could be paying a higher or lower rate depending on when you borrow and from where.
It isn’t the only fee applied to your advance. Some lenders apply finance charges, origination fees, and more. You’ll be able to see these fees in your cash advance contract.
By law, your lender must also show you the APR or annual percentage rate. This rate lets you know how much your advance is once you account for the interest rate and all other fees.
Once you know your APR, you’ll be able to crunch the numbers to see if you can afford to pay your advance in time.
Review 3 Facts About Your Next Cash Advance You Need to Know.