Instant cash loans are loans that you can apply for and receive within a short period of time. These are usually short-term and unsecured loans that can be used to cover emergency expenses. One of the reasons they are popular loan products is because they are available on the Internet and therefore readily available. Using instant cash as a long-term solution or if mismanaged leads to an increase in debt due to the relatively high-interest rates or commissions on loans, proportional to the amount of money borrowed and the length of the borrowing period.
Сomparative interest rate is 12.05%. However, in some cases, the interest rate may exceed 30%. This compares with the lower interest rates for other types of debt such as mortgages and secured loans. Still, these borrowing options are simply not available to a significant portion of the population due to factors such as credit history. Compared to instant cash loans or payday loans online, they are also inflexible products. Many loans do not allow early repayment, and secured loans sometimes take weeks to process with the bank. Is an instant cash loan any good? There are some favorable reasons why you should choose this type of loan.
1. Easy Qualification
Remember that you don’t need a perfect loan to get quick cash. Just make sure your property is vacant. Bring two forms of ID, registration and car to the reception and you’re done! Applying for a quick loan shouldn’t feel like an interrogation. That is why some MFos have redesigned the entire application process making it easier to apply for a loan, simplifying the approval process.
2. Fast Process of Taking Out a Loan
The goal of any MFI is to be convenient at the time you need by providing instant cash loans. There are other ways to get money when you need it though. Most lenders go through a laborious process that doesn’t always end up getting the money the borrowers need at the right time. Borrowing from the family creates awkward situations during family vacations.
Before taking instant cash, it is important to consider how much money you need. Most lenders have fixed amounts that they approve for you. If you need less than the minimum they lend, you either have no money or more interest to pay with instant cash. These options are not all that convenient and are somewhat confusing.
If you need more than they can handle, chances are you can beat them. Nobody lends as much as a verified MFI does for your asset. All you need to do is enter the website of any organization so that they provide you with the money you need in the future. Some of the MFIs can even tell you the rates for instant cash over the phone. However, the exact amount cannot be guaranteed until creditors do a quick personal check.
3. Approval Speed
The huge advantage of instant cash is the short time it takes to get the money you need. Most transactions take less than 30 minutes. With friendly staff, those 30 minutes feel like just five minutes. If you have a bad or no credit history, don’t worry! Not all MFIs check your credit.
Having received instant cash, you can choose how to spend this money. Not all lenders are friendly or flexible. Some competitors have loan products that determine how you can spend your money.
5. No Credit Rating Upgrade
As MFIs almost never do credit checks, they do not report transactions to the credit bureau. If you need an extension, the MFI will never tell you about it. Even if you cannot repay the loan, they will, unfortunately, have to sell your asset. This will ensure that your future credit rating is not affected by today’s hardships.
6. Instant Cash for Your Small Business
Unfortunately, many small business owners forget that their business may qualify for instant cash. Instead, they waste unnecessary time worrying about customers who have a 30-day billing cycle (or who don’t pay on time). If you have a payroll that you just can’t wait for or an insurance premium that needs to be paid, then this approach has become a dormant asset that you can use to get the instant cash you need. This way, you can survive by waiting for your unpaid invoices to be paid. Instant cash will help you get through a difficult life period or make difficult decisions that haunt you for years. MFIs work with their clients to provide them with the money they need. But they also do their best to give each client the time it takes to pay off the instant cash loan.
7. Instant Cash Allows You to Spend Money
It may sound crazy but some last-chance lenders fund instant cash with prepaid debit cards. Prepaid cards charge a commission every time you use them. Thus, some of what you borrowed ends up being wasted on third-party commissions.
Are There Any Drawbacks in Using Instant Cash Loans?
Since instant cash tends to be smaller, they also have shorter maturities. While this means you won’t be in debt for an extended period (assuming you make the scheduled payment), even getting a loan for a short period can be challenging if you live paycheck to paycheck. Like all loans, instant cash has its own advantages and disadvantages. However, It’s up to you to decide if the pros outweigh the cons and how urgent your needs are.
Debt Trap Risk
As mentioned earlier, instant cash is ideal for emergencies but it can be risky. This can lead to increased debt if you are unable to repay the loan on time. By their nature, unsecured instant loans fall into the debt trap more often than secured loans:
- Their affordability means that borrowers can borrow in a less urgent situation bringing them into debt when the debt was not the only option;
- Their higher interest rates mean that the cost of debt will rise faster over time if the borrower needs to keep taking out new instant loans to pay off the old loan plus interest;
- This can lead to an increase in the debt burden.
The short-term nature can give borrowers confidence that an instant loan although not being perfect will only be a short-term solution to the problem and will not be needed on a monthly basis. After all, instant cash has an official repayment plan that can be as little as 28 days. Circumstances can change. However, life turmoil can make these obligations burdensome. In the end, it can become difficult to get out of debt.
Kyle Drummond – as an Arizona State University graduate I’ve been fascinated with money and the road one takes to attain it since my first tax lesson in college. In my jobs at Silversail Wealth Advisors, BNY Mellon Wealth Management, and now at my own firm, DirectLoanTranfer, I have spent over 15 years coaching diverse customers on how to navigate their financial lives.