Five Questions About Cash Loans

A shaky economy has everyone on tenterhooks as workers are laid off one after the other. Inflation has jacked up the prices of most commodities. It doesn’t help that with commercialism and consumerism, people are pressured to keep up with the latest of technology.

It is no wonder then to find people strapped for cash, living on a payday-to-payday basis as they struggle with debt and mounting bills to pay. Banks and financial companies, seeing the need, have come up with a very convenient answer: quick cash loans.

Also called payday loans, quick cash loans are short-term loans that you can apply for those times you are in need of fast cash, such as during emergencies, urgent repairs and purchases, and for others, for paying credit card bills.

But, hold your horses! Before you head off to the nearest bank to apply for one, here are five questions about quick cash loans that you first need to ask.

How different are they from regular loans?

Quick cash loans are different from regular loans in a number of ways:

The loanable amount is considerably lower than a regular loan, typically from $1,000 to $10,000 maximum.
With regular loans, you would need a collateral, whereas you don’t need one with quick cash loans.
Regular loans have longer payment terms, and quick cash loans require that you pay back the amount in a matter of weeks up to three months. Some companies offer repayment options of up to six months, max.

What’s the risk with quick cash loans?

With these kinds of loans, the risk is minimal as you are only dealing with a lower amount and especially because there is no collateral involved. However, without proper financial planning and advice, short-term loans like these can drive people further into debt. This is because they charge higher interest rates and penalty fees.

In fact, many have found themselves buried in debt as they are unable to pay one loan off, forcing them to take out another loan which they cannot afford to pay.

Is it easy to apply for a quick cash loan?

Applying for short-term loans are certainly easier and faster compared to regular loans. As a popular choice among those with low credit rating, quick cash loans do not require a lot of paperwork. Your basic requirements would be a certification or proof of your employment or source of income, and an active bank account.

Many lenders and banks also offer on-the-day application, processing and releasing. There are also options for online applications, making it more convenient and a lot faster.

Are loans like these also prone to scams?

Because people are looking for quick and fast cash, scams in quick cash loans certainly abound. How to spot one? At the very least, make sure that you are not asked to give a cash advance or pay-out when you apply. Legitimate companies do not ask for any registration, application or processing fees for your loan application.

What are your options if you’re not going for a quick cash loan?

You can always consider getting a regular loan from your bank even with a low credit score. Find a co-guarantor with a good credit rating to sign the loan application with you to up your chances of approval. There are also credit unions and cooperatives that offer regular loans at lower interest rates with friendlier payment terms.

If you’re worried about getting stuck in debt and up in your neck paying exorbitant interest, it is always advised to consider other sources, including borrowing money from family and friends.