With most Americans struggling through the pandemic without an emergency fund, cash advances pick up the slack in many budgets.
What would you do if you woke up one day to a burst pipe, broken-down car, or sick pet? If you don’t have any savings squirrelled away, a cash advance might be an option. This small personal loan provides a safety net in emergencies, giving you fast cash to handle your unexpected expense.
But like any borrowing option, a small cash advance is a big financial decision. To make sure you’re making the right one, follow these tips below. They’ll help you prepare for borrowing money in an emergency.
Know Your Cash Advance Options
Financial knowledge is financial power. When you understand the options on the table, you’ll be in a better position to make an informed decision.
Take some time to look at the borrowing options available today. If you’re considering a small personal loan, a cash advance comes in many shapes and sizes, varying in rates and terms.
One might work better than others, so be sure to compare these common small dollar loans:
Payday Loan
This short term loan arrives in one lump sum, and you have to pay it back in one lump sum, usually by your next payday.
Installment Loan
An installment loan also arrives in one lump sum, but you have more time to repay it. Your contract will outline multiple payment dates, breaking up the cost of your advance.
Line of Credit
As a revolving financial product, the line of credit works like a credit card. You’ll be able to charge purchases up to your line of credit limit, paying only the portion you use. And if you bring your account balance down to zero, you can tap into this limit again and again.
Figure out Your Budget
Your budget can help you figure out whether any of the options above make sense for your emergency.
If you don’t have enough spare cash in your budget to repay a cash advance in full by your next payday, then a payday cash advance isn’t a good fit. Maybe an installment loan would work better.
Find out the Rates and Terms
You’ll need to sub concrete numbers into your budget for it to work at its best, so you’ll want to look at online direct lenders and their specific rates and terms.
Online direct lenders share this information on their websites, so you’ll have a good idea of what their cash advances will cost you overall and per payment.
This comparison not only helps you find an option that matches your budget, but it may also help you track down the best rates and terms for your financial profile.
Get Your Info in Order
Online direct lenders will also list their eligibility requirements on their website, which you’ll want to check. Otherwise, you can wind up wasting time applying for something you don’t qualify for.
Usually, you’ll need to supply financial information, including your contact details, bank account numbers, and employment and income details.
You’ll also have to agree to the lender checking your credit. Depending on the lender, they may not cater to people with subprime credit scores, so make sure you fall within their standards.
The Takeaway:
Cash advances can stand in for emergency savings when you fall short. But you have some work to do before you apply. Follow these tips and you’ll find the best possible option available to you today.
