Is it a Good Idea to Take Out a Cash Advance Loan?

A cash advance loan can be a lifeline if you find yourself in a situation where you are short for money and payday is still a few days away. When your car breaks down or your washing machine is broken and you need a replacement fast, borrowing some money short term is a good option.

A cash advance loan is often the only form of credit available to people with low incomes or sub-prime credit ratings. These people struggle to get low interest credit cards and loans from mainstream lenders. Short term loans are a better option for them because they are based on affordability rather than purely on credit ratings.

The interest on cash advance loans can be high, and fees for late repayment are often described as punitive. For this reason, such loans should only be used as a last resort. Do not use them for day to day spending, or to cover things like rent.

Most financial advisers would suggest that rather than using a cash advance style lender, people turn to credit unions or their personal bank. This is a much better option because interest rates are lower, and even if you repay over a longer term you will probably end up paying back less. For someone who is stuck in a difficult situation, high interest rates can be crippling.

Whether you take put a cash loan from one of these sub-prime lenders is up to you, but remember that if you do take one out you should try to avoid borrowing too much, and you must make the repayments on time. Failure to do so could leave you with an even worse credit rating and serious financial difficulties for many more years to come.