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Cash Advance Definition

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You may require cash now and need to find a lending source quickly. Many types of loans exist, but cash advance loans are some of the most convenient and easily attainable loans for people who need money immediately.

Let’s define a cash advance. A cash advance loan is a short-term loan that provides a small amount of cash (usually between $100 and $1,000). There are several cash advance loan types, each with pros and cons.

What Are the Different Types of Cash Advances?

The term “cash advance loan” is very general and can refer to several types of loans.

1. Credit Cash Advance

The most common and well-known use of the term refers to borrowing cash against a credit card. In this form of cash advance, you withdraw money by:

  • Using an ATM with your credit card and pin.
  • Writing a check to yourself and then cashing it (if your credit company issues checks).
  • Visiting an in-person bank location to withdraw the cash.

2. Payday Loans

Payday loans are loans you must repay when you receive your next paycheck. Borrowers can extend the loan to the next payday, which involves extra fees.

3. Merchant Cash Advances

Merchant loans are a form of cash advances that companies or businesses take out, not individuals.

What Are the Benefits of a Cash Advance?

A cash advance can have several benefits for the borrower, like the following:

  • You can get cash immediately. A cash advance option is especially helpful if you need the money for a medical emergency, car repair, or travel expenses.
  • A credit check or application process isn’t required.
  • You don’t have to provide collateral for a loan.

What Are the Disadvantages of a Cash Advance?

While cash advances can be extremely helpful, borrowers must be aware of some common disadvantages before making a decision.

  • A man displaying a hand full of cashSince cash advances don’t involve applications or collateral, they come with high interest rates or loan fees.
  • You’ll owe the complete cash advance fee no matter how quickly you repay the loan.
  • Taking out money against your credit card could severely damage your credit score if you fail to pay the cash back on time.
  • When you withdraw money, you have no insurance. If someone steals your credit card and uses it, the card company may reimburse you for fraudulent purchases. However, the credit card company won’t reimburse you if you withdraw cash and it’s stolen.

How Much Does a Cash Advance Cost?

The cost of a cash advance depends on the lending company and the interest rate you secure. Before getting a cash advance, read your credit card’s fine print first.

Expect to pay a fee for a cash advance. There may be an upfront cash amount like $15 or a percentage of the advance of around 3 – 5%. Additionally, you may pay high-interest fees on your loan, sometimes around 25%.

Get Money Fast With Power Finance Texas

When you need money instantly, Power Finance Texas can provide you with a loan in as little as one day. The application process takes only a few minutes, and you don’t need to worry about collateral or your credit score.

To start the application and get the money you need now, visit the Power Finance Texas site and get started.