This type of loans gives you the opportunity of borrowing cash against your available credit through your credit card company. You will be required to pay the loan back within specified time with fees and interest.
How much cash you can borrow is actually determined by the credit card company depending upon the left limit of your card and as a matter of fact, anybody who holds a credit card can avail this cash loan until the limit is reached.
How loans are quickly approved?
One of the reasons that people take online cash advance is quick approval time. If there is any requirement for urgent cash quick cash loans can solve the situation. As the money that is being borrowed is coming from the applicant’s credit card account, the loan providing company doesn’t waste time on checking and verifying credit scores and one can receive the required amount in real quick time.
Terms and conditions
If you are thinking about taking quick Payday loans online you need to be very well aware of the terms and conditions associated with it.
Normally two expenses are associated with payday loans and along with the interest on the borrowed amount the borrower is also required to pay an upfront fee. Interest is calculated from the moment the amount is borrowed till the time of payback and if you are going to take payday loans for the first time, you should know that annual percentage rate of interest on cash advances is much higher than the rate one requires paying for his regular credit card purchases.
In addition to this, the interest free grace period that one finds available with credit card companies is not available with cash advances. Interest starts accumulating from the moment the loan is issued. Interest rate on cash advances can be as high as 24% and along with this interest the borrower also need to pay up a transaction fee – which can be around 5% or more of the borrowed amount. Borrowers who have their credit score on the lower side may require paying a higher transaction fee.
Good or bad?
For people facing liquidity problems cash advances are a quick way out but they do come with a high cost. Both the transaction fee and rate of interest are pretty high compared to normal back loans or credit card purchases. As a matter of fact borrowers pay up a part of their borrowing amount as transaction fee even before the money reaches their hand.
The borrower actually adds more to his credit card utilization by adding more to his credit card balance and online cash advances do have a negative impact on the borrower’s credit score. For maintaining a good credit score or in order to improve it, as a borrower you need to keep in mind that your credit card utilization should not be more than 30% of your credit limit.
Quick payday loans can really get you some quick cash but the cost you pay for it is also pretty high and there are other alternatives available too, which you can also give a try.