Cash loans are great solutions to certain financial problems. Why not? They are easy to take out. You don’t have to go through rough loan application process as you normally would if you borrow money from a bank and other traditional lenders. In fact, you can take out cash loans online, without having to show your face to your lender. These are the good things about cash loans, but what are the disadvantages of these types of financial solutions?
Cash loans may be convenient to take but these loans may not be the perfect solution to every financial problem. Also called emergency loans, cash loans are only ideal for emergency or urgent financial needs. If you have nowhere to go and you are in dire need of money, you can count on top rated loans for people with bad credit.
Before you send your application for a cash loan, here are some tips which can help you find the best cash loan for your needs.
1. Determine how much you can afford.
It is very important that you analyse your budget before you decide to apply for cash loans. Doing so will allow you to decide on how much cash loans you can afford to take. In addition, it will also help you decide which type of cash loans to take.
Be realistic and consider everything – down to the last cent. You also have to take into consideration the amount that you can pay if your mortgage, rent, electricity and other bills went up.
2. What is the interest rate (APR)?
The interest rate is the amount you need to pay on top of the money you borrowed. It is by charging an interest rate that the lender can earn from lending cash loans to you. The interest rate will depend per lender per state. Of course, banks would have a lower interest rate in APR compared to the non-traditional lenders of short-term cash loans.
The thing with short-term cash loans is that they are short-term. You need to pay back the loans you took in 30 days or your next payday. Therefore, the APR won’t really apply.
3. Determine how much will the cash loans cost you per week or month?
One of the payment options in cash loans is installment. If the loans you took are long-term, then the installment amount would be collected every month. If they’re short-term then the installment amount will be collected per day or per week.
It is entirely up to you to choose the payment option you prefer. Whatever you choose, make sure that you are able to fulfil it.
4. Determine how much total do you need to repay?
Consider the principal amount plus the interest, can you afford it? If yes, then carry on with your application. If no, stop and withdraw your application.
When looking at the total amount that you need to repay, you also need to consider the penalties. This is so you are prepared in case you will be unable to hold your end of the deal.
There is one another consideration that is often missed out but is equally important – what is your credit score? You are asked this because your credit score limits your options for cash loans. If you have a bad credit rating, chances are high that you will not get an approval from banks and other traditional lenders. If you have bad credit rating, your best option could be the online lenders.
As you can probably see, cash loans may not be for everyone. It is imperative that you understand how and why you qualify for such loans before you apply for them. But cash loans can be good for you and your bad credit rating too. This is because if you pay them back, just like you promised, there is a possibility that your bad credit rating will be reversed.