When struck by a financial emergency out of the blue, most of us would require a small amount of money to bridge the gap. But what if you’ve never issued a credit card? Do you have the time it takes for a loan to process? In such a case, an instant cash advance can come in handy.
Through this article, we’ll learn more about cash loans, whether or not these loans are a feasible credit option and how you can avail of one.
What are cash loans?
Put simply, a cash loan is a small financial aid used to cater to urgent expenses or financial emergencies. Essentially, you borrow a loan and get the funds through a bank transfer after approval. Once you receive the proceeds, you can withdraw the cash and use it as per your need. Cash loans are generally an unsecured form of credit, ergo, you don’t need collateral to get one. However, the eligibility criteria differ among different cash loan lenders, but a payslip or proof of income is a basic document, common across all.
In order to qualify for a cash loan, you must fall into the categories mentioned below:
- Be the age of 18 and above
- Be a legal resident of the UK
- Have a bank account in the UK
- Have proof of a regular income in the UK
The term ‘cash emergency’ encompasses a list of unexpected expenses such as a car repair, kitchen refurbishments, or to cover bill and rent payments after an income reduction.
Cash loans can be more expensive compared to their counterparts as they’re unsecured and the lack of collateral poses a risk to the lender. Thus, these loans come at higher rates of interest. However, if you’re unwilling to use the overdraft facility or have never issued a credit card, you might find this option feasible. People who don’t wish to indulge in the process of increasing their credit limit or applying for a personal loan might also like cash loans better. These loans may be ideal for those who need a quick cash advance.
Here’s what you can use a cash loan for
People borrow cash loans to solve all kinds of purposes. You can use a cash loan to fulfill some pressing needs that can’t wait until your next payday. Following are some examples of what a cash loan can be used for:
- Vehicle repair
- Emergency home repair such roofing or plumbing issues ‘
- Special occasions
- To settle rent arrears
- Purchase of a new appliance
- To pay unanticipated hospital bills
- Regulate cashflow for household expenses
So long as you demonstrate responsible behavior with your credit, you can use a cash loan for almost anything. Cash loans can be helpful to get past a short-term cash crunch owing to job loss or a decline in income. All you need to do is ensure timely repayments for your loan.
Pros and Cons of using cash loans
The key to avoiding debt is borrowing responsibly. Last-minute checks won’t be very useful while borrowing a cash loan. Therefore, we encourage you to weigh the pros and cons of this credit option before taking up your lender’s offer:
- Cash loans are convenient: Cash loans provide you with ease of application regardless of your location. So long as you have a laptop or smartphone with an internet connection, you can apply for a cash loan. You won’t need to physically visit a lender or a broker to file your application. The entire process takes place online.
- Cash loans are quick: Cash loans are meant for people needing a quick cash advance. The online application procedure for these loans is swift, so is the approval process. This is because the entire system, right from application to money transfer, is automated. If you opt for a reliable lender, you may even get the cash in less than an hour.
- Requires internet access: Not all of us are tech-savvy. Some might not have a smartphone or internet access. Cash loans are only available online so not having an internet connection could be a hindrance.
- The transfer is not in cash: As stated before, the process of money transfer in a cash loan is automated. Therefore, you won’t receive physical cash, but a money transfer via bank.
- Approval rate: Since different lenders have different eligibility criteria and approval rates, there’s a fair chance that your application can be declined. If your lender has a low slab for approval rates, your loan application with that lender was a futile attempt.
How can I get a cash loan?
Taking out a cash loan is a fairly straight-forward process. You just need to follow a few basic steps:
- Step 1: File a personal loan application online with personal identification details such as your address and bank account information. Then mention the amount of credit that you’re looking to borrow.
- Step 2: Go through the loan agreement thoroughly and check the loan amount, repayment amount, interest rate, and fee. Read the terms, conditions, and fine print with utmost attention to fully grasp the terms of the contract.
- Step 3: Once you’ve submitted your application, wait for the lender to assess it. The success of your application depends upon the accuracy of the information provided by you. Lenders usually run an affordability check to ensure that you will be able to repay the loan in full. Some lenders might run a soft credit check to determine your creditworthiness. This is understandable because lenders want to minimize the risk of default. Since the cash loans are unsecured, they don’t have collateral to cover the loss incurred due to a default.
- Step 4: Once your application is complete and all the data is accurate as per the lender, at this point, they might approve the loan. Now that the loan is approved, you can expect a bank transfer within a few minutes or hours.
Regardless of the form of credit you choose, or the loan amount, it is imperative for you to shop for loan offers. Visit Loan Princess for a hassle-free and quick loan comparison experience. Weigh the pros and cons of each offer and choose your ideal cash loan with Loan Princess.