People often prefer cash when they’re stuck in an emergency. Not everybody has a credit card at their disposal. Plus, if it’s an urgent situation, you wouldn’t have the time or patience to apply for a loan. In such cases, a cash loan could come in handy.
In this article, we’ll learn more about what cash loans are and things to keep in mind while applying for one.
What is a Cash loan?
A cash loan is simply a minor financial aid that can be used to fulfill a pressing need or cater to a financial emergency. A cash emergency could be car repair, kitchen refurbishments or rental payments due to a pay cut. This form of credit is often unsecured, which means you don’t need to declare a collateral to get one.
Cash loans are slightly more expensive than other forms of credit. Unsecured loans offer very little security to a lender. So, to compensate for a potential loss, they propose high interest rates. But, if you’ve already exhausted the overdraft facility, or simply don’t want to use an overdraft or credit card, a cash loan can help you out.
People who’ve never issued a credit card, often resort to this option. Some of us also avoid increasing our credit card limits, since it could lead to overspending. Additionally, the whole process of applying for a loan and seeking approval, can be exasperating. This makes cash loans a popular choice among Britons looking for a quick cash advance.
The eligibility criteria for cash loans
Checking your eligibility for a cash loan will give you an idea about your chances of approval. While the eligibility criteria varies from lender to lender, here’s are some basic parameters that you must qualify:
- 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
As long as you satisfy the aforementioned criteria, you will likely be eligible to apply for a cash loan.
What can a cash loan be used for?
Some expenses may require your urgent attention. Such expenses cannot be piled on until your next payday. A cash loan can solve this purpose for you. Here’s a list of things you can use a cash loan for:
- Vehicle repair
- Emergency home repair such as roofing or plumbing issues
- Special occasions
- To settle rent arrears
- Purchase of a new appliance
- To pay unanticipated hospital bills
- Regulate cash flow for household expenses
A cash loan can help with any urgent expense as long you demonstrate responsible credit behavior. Cash loans can be helpful to get past a short-term cash crunch owing to a wage cut or job loss. All you need to do is ensure timely repayments towards your loan.
Things to consider before taking a cash loan
The key to avoiding debt, is borrowing responsibly. There are merits and demerits associated with each form of credit. What’s important is, to weigh these pros and cons before borrowing accepting the lender’s offer.
Pros:
- Cash loans are convenient: Applying for a cash loan is a fast and straightforward process. So long as you have a laptop or smartphone with an internet connection, you can apply for one. 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 in need of a quick cash advance. The online application procedure for these loans is swift, and so is the approval process. This is because the entire process – 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.
Cons:
- Requires internet access: Not all of us are tech savvy. Some of usmay not even have a smartphone or internet access. Most cash loans have an online application procedure. So, the lack of an internet connection could hinder the application process.
- Transfer is not in cash:The proceeds from a cash loan are transferred online. 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, applying with that lender may be a futile attempt.
Here’s how you can apply for a cash loan
The application procedure for a cash loan isn’t complicated. Here are some basic steps you can follow:
- Step 1: File a cash loan application online, with personal 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 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.
- 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.
Tips to apply for a cash loan
There are a number of reasons due to which your loan application may get disproved by the lender. Here are some tips to help you successfully apply for a cash loan:
- Check your eligibility: Ensure that you satisfy the prerequisites of a cash loan:
- Be 18 years of age or above
- Have a legal residence proof in the UK
- Have a UK bank account
- Be an employee or have proof of a source of income
- Supply correct information:All the information that you supply to your lender in a loan application, must be correct and up to date. Thus, you must fill the application with utmost honesty and attention. Typos, errors or discrepancies could have serious consequences. Lenders can decline a loan application with incorrect data. They often conduct background checks before approving a loan, and so, false data won’t go uncharted.
- Pay off outstanding debts:It is wise to settle your outstanding debt before applying for a new loan. Lenders tend to avoid borrowers with large outstanding debt since these things directly impact your creditworthiness.
- Borrow only what you can afford: Borrowing extra just because you get approved for a higher loan amount isn’t a smart move. Irresponsible borrowing will only make it difficult for you to repay the loan. And, a default in repayments will result can gravely damage your credit score.