Even if you have sound financial habits, you might suddenly find yourself in such a bad emergency that your savings and current earnings aren’t enough to cut it. It’s during times like these financial options like cash advance really come in handy.
Cash advances are a form of financial aid that is typically lent out for a short period of time.
Like any other type of financial aid option, cash advances also come with their own upsides and downsides. If you haven’t heard of cash advances before and don’t know how they work, here are a couple of things you should know about them before considering applying for one using one of the many cash advance apps out there.
How Do They Work?
If you don’t know already, you’re probably asking yourself what exactly are cash advances. To put it simply – cash advances are short-term financial aids that usually don’t have any interest attached until the loan repayment date is due. Interest rates only start stacking after that agreed-upon period. They are structured differently from payday loans though monthly repayment options are also available.
Cash advance apps work because they have a direct-to-customer system that allows users to take a cash advance against upcoming paycheck or bank deposits. This allows you to get emergency funds when you’re in a pinch without financially compromising yourself with long-term loans and high-interest rates. The app keeps track of your payday/deposit by taking certain information from you.
All of this allows for a seamless financial aid system that doesn’t exploit clients in most situations, but that doesn’t mean the service comes without any fees because there definitely are. These apps are more like subscription services that allow you to take cash advances against verified income sources.
Ease of Access
Though the concept of cash advances is fairly new, they’re actually very simplified and easy to gain access to. You have to download the desired cash advance app and register from your smartphone. Usually, the registration process is completed in just a couple of minutes, with you just having to provide your ID and some basic details.
The best part about taking a cash advance from a cash advance app is that you don’t have to pay a visit to your bank to get the formalities done. All that has to be ensured from your end is to make sure you meet the minimum qualifications to be eligible to take a cash advance. This ease of access has made cash advances popular among small and medium-sized businesses over the last couple of years.
If you think these apps are only for those who have a steady income stream, you would be wrong. According to Lauren Saunders, associate director at the National Consumer Law Center, “The apps are heavily used by people who make minimum wage, people in retail, and fast-food workers who are disproportionately people in communities of color.”
What to Watch Out For?
Though cash advance apps come with many benefits, there are a couple of things you need to consider when applying for one. As mentioned before, you need to meet the qualifications, including the history of direct deposits, meeting minimum direct deposit requirements, etc. You also need to take a look at the fees and terms and conditions thoroughly as well.
It’s always smart to compare cash advance apps, so you know which ones are dependable as well as which one suits your income and financial situation. Over the years, cash advance apps have also become prominently known for some particular disadvantages and problems as well. One of the biggest problems is money-lenders disguising themselves as cash advance merchants.
By disguising their business as a cash advance service, these unscrupulous loan sharks include unreasonable terms and conditions in their contract agreements which can put you in quite the nasty position if you’re not careful about doing some research before signing up for one. Since many customers don’t understand the details properly, these lenders get away with the scam a lot.
To Take or Not to Take
If you’ve done your research properly on cash advance apps and have a financial game plan, using a cash advance app might be a good option. You can gain access to financial services that don’t put any extra pressure on you for a minimum subscription fee. Just make sure you meet all the criteria and take the advances only when necessary.