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Different types of cash advances
Various types of cash advance with a variety of features are available, but the higher interest rate is a common feature of all cash advance loans. These types of loans are quite popular and are borrowed with a credit card.
Sometimes, a cash advance is defined as borrowing on a line of credit. Simply put, it is borrowing cash. This may be done by using a personal credit card and it is often possible to conveniently get these cash advances at ATM machines. Alternatively, some credit card companies give their customer checks, which can be deposited into a checking account or encashed. Advances are usually borrowed at a higher interest rate than for regular credit card use, with rates a few percentage points above the prime rate.
There are different types of cash advance lenders. It is quite easy to withdraw the money via an ATM, or you can provide a check.
The interest rate for these cash advances can be different from credit purchases, but monthly repayments are required in both cases. If you are making the minimum payment, the cash advance lenders are regulated by federal law to apply lower interest rate on minimum payments. The interest rates and fees of cash advances may vary based on the policies and working procedures of the cash advance lender. It is good to understand the various features of the loan before borrowing the cash with your credit card.
A payday loan is a common category of a cash advance loan with high-interest rates and fees. The cash advance lenders may provide loans between $100 and $100,000. The interest rate of the loan may exceed 100%. The borrower will have to repay the short-term loan on his next payday. A post-dated check is provided to the lender when the borrower takes out the payday loan.
There are many payday loans companies which offer loans to help people cover expenses until their next paycheck. Fees and interest for these payday loans are usually high than other types of loans, and people can expect to have to use quite a big chunk of their paycheck to repay the payday loan. Using payday loans may be a tricky issue for some as loan repayments and the high-interest rates can reduce paychecks so much that there is very little money for regular expenses, which may cause more loans to be taken out. Financial experts tend to recommend people to avoid payday loans because of their high costs of borrowing.
The employer is another alternative lender which can provide a cash advance loan. The interest rate and fee may vary based on the policies of your company. You can borrow money from any one of the cash advance programs, but make sure to carefully read all important details, interest rates, and the other charges, especially if you have a bad credit history. In order to get the payday loan from your employer, you should be at least 18 years and a legal resident of the United States. Your employer should have employed you for a minimum of 90 days , and you must have a bank account to get the money directly deposited into your account.
Other types of online cash advances include the refund anticipation loan (RAL). Again, these loans charge high fees and interest rates and are disbursed based on the amount of money a person will get back in income taxes.