Home Business Beginner’s Guide To Cash Advance Loans

Beginner’s Guide To Cash Advance Loans

by Erica Farmer
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There are many kinds of loans, for many different situations. Loans also come in two forms; unsecured, and secured. 


Secured loans are the type of loan that offers security to the provider of the loan, this means that the provider takes collateral, be it your home, car, or other possessions in order to ensure that if you default the loan they are covered. 

Unsecured loans are loans that do not rely on collateral. Instead, you will have to pay an interest rate in order to have the loan. The interest rate that you pay is entirely dependent on your credit score. 


Your credit score will dictate the loan you get if you get the loan, and how much you have to pay for it as well. 


So, what about cash advance loans? Well, these are a bit different from loans like personal loans which are greater in amount but do take more time to go through. 


Let’s learn about cash advance loans and what you should expect with a CreditNinja cash advance

What Is A Cash Advance Loan?

Cash advance loans are very small loan which is designed to help you get the cash that you need as soon as you need it. Getting an advance is simply a way to get what you need sooner than you would in normal situations. 


An advance loan will help you to get cash from your paycheck before normal times, so they have the finances they need on hand when they need them. 


There are many different types of loans available. Cash advances are another usual way of referring to types of loans such as payday loans. So, instead of having to wait for your paycheck to come through, this advance gives you that money now. 


What Are The Types Of Cash Advance Loans?

So, what are the types of cash advance loans you can get? Well, there are a few different types. Here are those. 


Payday Loans

One of the types of cash advances is payday loans. This type of loan is a small and short-term loan that is only borrowed until your next payday. 

These loans are made to carry you to your next payday, and then you pay them off with your next paycheck, so they are not big loans. 

However, you can easily get caught in a circle of debt if you take out a payday loan without being responsible for your finances.


Advance On Income Tax Refunds

Another type of advance loan you can get is a tax refund advance. We usually do not receive our whole tax refund until your taxes have been filed, however, instead of waiting that long, you can take out an advance instead and get this sooner. 


It is not that common for these types of advances to happen, but it’s comforting to know that they are there. 


Credit Card Advance

A final type of cash advance is an advance that you can use on your credit card. However, you should check that your credit card provider actually allows this type of advance, not all do. 


If they do, you can take out cash at an ATM or at a bank with your credit card as an advance. 


Do keep in mind that there will be restrictions and fees for each and every cash advance you take out with your cash card for this purpose. 

Why Might You Get One? 

There are plenty of reasons why you might get a cash advance. Of course, the main reason is obvious- to get your money sooner instead of later. 


There are many borrowers who will take out a cash advance because they actually need this money to pay bills or make purchases that are sensitive to time.


Here are a few reasons why someone may take out a cash advance:


  • In order to avoid overdraft fees. 
  • To prevent having to take any money out of your savings account or your emergency fund. 
  • To keep you from paying rent late. 
  • To keep you from paying bills late. 
  • In order to take advantage of sales that may be time-sensitive. 
  • To help in affording groceries and other typical everyday expenses.


It is safe to say that cash advance loans are very targeted towards people who may already be living in thin financial situations, they do help, but only in the short term. It is wise to consider better money management if you can. 


Cash advances such as payday loans can easily land you in a cycle of debt, especially if you end up having to use much of your paycheck to pay off the previous loan, and then you end up needing another to fill in the gap and so on. 


Related to this: Current State of Biden’s Student Loan Forgiveness


What Are Some Alternative Options? 

Since loans like this can be problematic, there are alternatives. Sometimes it is best to seek out an alternative instead to keep you from ending up in a tricky situation that could land you in further financial difficulty. 


Of course, this is not to be said for every instance in which someone takes out a cash advance loan, but it is best to be safe. 


So, instead of taking out a cash advance loan, you could take out a personal loan. These are flexible that can be taken out for any variety of personal reasons, unlike some other loans they have no set or specific purpose for which to be used. 


Read More: Small Business Loan Approval Rates


They are a great way for people to get quick and personal funds. However, they can have a minimum limit, so it also depends on how much you need to borrow. Also, they can take some time to process depending on the lender, so it is best to do your research. 


Alternatively, you could also borrow money. Not from a lender or credit company though, instead you could borrow money from your friends or family if you do not need much. 

This is ideal for only needing a little bit, and can prevent debts with interest rates weighing you down. 

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