Three Things To Consider When Taking Out a Cash Loan

If you are short on funds or have come across a financial emergency and need immediate access to extra cash, then bad credit loan may be just what you are looking for. With a cash loan, you can borrow an amount between $100 and $1000, and pay it back on your next payday. These loans are very useful when you have bills that can no longer be ignored or if you have other expenses you need to take care of that just can’t wait until payday.

Getting a cash loan is like getting an advance on your next paycheck. The loan lender or company allows you to borrow the money you need and you pay the full amount on the following payday. In most cases, an arrangement is made so that the amount is withdrawn directly from your bank account on the designated date. This way, there is no hassle and no need to write checks or make a trip to the post office, and it saves money for both the lender and you. It is also more secure as the loan value is transferred automatically.

Figure Out How Much You Need

Because cash loans are so easy to obtain and are available for virtually anyone, they only come in small amounts from $100 to $1000. If this is not enough for you, it is better to apply for bad credit loan with your bank rather than taking out multiple loans, as this will result in higher charges and interest fees. It is also important to only take out as much as you can pay back by your next pay date, as failure to do so will result in penalties and late fees as well as interest on any money you borrow. Try to take out just a little over the amount you actually need, so that you are sure that you can take care of your financial needs.

Find a Competitive Interest Rate

Because these loans are only short term, they usually have higher interest rates than long term loans that you can get from banks or other financial institutions. When considering taking out bad credit loan, it is important that you compare the rates and fees to other lenders of that nature, and read all terms and conditions to ensure that there are no hidden fees. Interest rates tend to range from 12% to 30%, even though sometimes they may be as low as 10%. If a lender is offering an interest rate of over 30%, it is better to pass. Note that interest rates are also higher for smaller amounts borrowed, as the creditor has to make enough money on the deal to cover any expenses.

Have Proof of ID and Income

Although the lender will perform a credit check when reviewing your application, this information will not be taken into account, and you may still be eligible for a loan even with poor credit history. As long as you can provide adequate proof of who you are and how much you make, you will likely qualify for a cash loan. The lender may also require copies of the following paperwork: driver’s license, birth certificate, latest pay stub, latest bank statement, and income tax statement. It will also be required that you provide your bank account details so that the lender can set up deposit and withdrawal arrangements.

Although cash loans can be a great resource to help you stay on your feet until the next payday, it is important to take caution when taking out a loan. Take the time to do adequate research and find a reputable lender who offers reasonable rates. Signing an agreement in haste may solve your problems now but leave you with high fees and charges to pay out along with the loan amount if you are not careful when choosing a lender.

Implications of Late Payment

If your short term loan is not paid on time, there are several courses of action that can be taken by our lenders. You can find out your particular lender's practices by visiting its website. You should read this information carefully before you electronically sign any loan agreement.

Implications of Non-Payment

When loans go unpaid, this can influence you in several different ways. You should always be sure to negotiate payment arrangements with your lender if you are unable to repay your loan as stated in the original agreement in order to avoid or reduce the following:

Financial Implications - While the fees for short term loans of up to $500 already amount to 15-40% for $100 borrowed, unpaid loans can have even higher charges. Also, the interest charged on loans of more than $500 can be higher. Additional charges for non-sufficient funds can be $20 or more and loans that are more than 15 days past due can be assessed additional charges of up to 10%.

Collections Practices - Our lenders reserve the right to contact you via telephone, text message and email in an attempt to collect the money they are owed. Generally, they will not sell your debt to collection agencies or sue you for the unpaid balance; they will instead offer debt settlement options. All lenders must adhere to the guidelines of the FDCPA, or Fair Debt Collection Practices Act, that was put into effect by the FTC. Additional information can be found at http://www.ftc.gov/os/statutes/fdcpa/fdcpact.shtm or through the lender directly.

Impact on Credit Score - Failure to repay short term loans can have a negative impact on your credit rating if your lender reports to any of the major consumer credit bureaus. This will remain reflected in your credit history until the amount of the loan is repaid in full. This may also hinder your ability to take out short term loans in the future.

Renewal Policy - Some lenders will require you to agree to automatic loan renewals if you cannot pay your loan on the initially scheduled date. This is in addition to other options you may have, including paying your loan in full or making arrangements to pay down the principle balance over time. Please review your documentation carefully for automatic loan renewal information. You should also understand that additional interest and finance fees will be charged if your loan is automatically renewed.

Disclosure of Fees Including the APR

The Annual Percentage Rate, or APR, associated with short term loans is usually between 260% and 1825%. Though this seems high, it is actually quite competitive. These percentages depict what you would pay over the course of an entire year. Since these loans are made to be paid back quickly, they are highly competitive and less expensive than bounced checks and overdraft fees.

APR Comparison Table

14 Days
How does the APR for a single payment small dollar loan compare to other options? Compare your options for the cost of $100 extension of credit for
Product Type (single repayment) Charge APR
NSF + Bounced Check $45.00 1,173.21%
Overdraft Fee $30.00 782.14%
Late Fee $20.00 521.43%
Small Dollar Loan $10.00 260.71%
2 Days
How does the APR of a small dollar loan compare to the consequences of being unable to obtain a small dollar loan? Consider the cost of a $100 extension of credit for
Product Type (single repayment) Charge APR
NSF + Bounced Check $45.00 8,212.50%
Overdraft Fee $30.00 5,475.00%
Late Fee $20.00 3,650.00%

APR Calculations

$100.00 Amount Financed, $120.00 Repaid 2 days after the borrowing

Interest earned on last day but not the first, so 2 days earning: Per Diem uncompounded Interest = 3,650.00% per 365 day year = APR

$100.00 Amount Financed, $130.00 Repaid 2 days after the borrowing

Interest earned on last day but not the first, so 2 days earning: Per Diem uncompounded Interest = 5,475.00% per 365 day year = APR

$100.00 Amount Financed, $145.00 Repaid 2 days after the borrowing

Interest earned on last day but not the first, so 2 days earning: Per Diem uncompounded Interest = 8,212.50% per 365 day year = APR

$100.00 Amount Financed, $110.00 Repaid 7 days after the borrowing

Interest earned on last day but not the first, so 7 days earning: Per Diem uncompounded Interest = 521.43% per 365 day year = APR

$100.00 Amount Financed, $110.00 Repaid 14 days after the borrowing

Interest earned on last day but not the first, so 14 days earning: Per Diem uncompounded Interest = 260.71% per 365 day year = APR

$100.00 Amount Financed, $120.00 Repaid 7 days after the borrowing

Interest earned on last day but not the first, so 7 days earning: Per Diem uncompounded Interest = 1,042.86% per 365 day year = APR

$100.00 Amount Financed, $120.00 Repaid 14 days after the borrowing

Interest earned on last day but not the first, so 14 days earning: Per Diem uncompounded Interest = 521.43% per 365 day year = APR

$100.00 Amount Financed, $130.00 Repaid 7 days after the borrowing

Interest earned on last day but not the first, so 7 days earning: Per Diem uncompounded Interest = 1,564.29% per 365 day year = APR

$100.00 Amount Financed, $130.00 Repaid 14 days after the borrowing

Interest earned on last day but not the first, so 14 days earning: Per Diem uncompounded Interest = 782.14% per 365 day year = APR

$100.00 Amount Financed, $135.00 Repaid 7 days after the borrowing

Interest earned on last day but not the first, so 7 days earning: Per Diem uncompounded Interest = 1,825.00% per 365 day year = APR

$100.00 Amount Financed, $135.00 Repaid 14 days after the borrowing

Interest earned on last day but not the first, so 14 days earning: Per Diem uncompounded Interest = 912.50% per 365 day year = APR

$100.00 Amount Financed, $145.00 Repaid 14 days after the borrowing

Interest earned on last day but not the first, so 14 days earning: Per Diem uncompounded Interest = 1,173.21% per 365 day year = APR