Do you need emergency cash without going to a back and going through tedious paperwork? Do you want to apply for a loan where you don’t need to explain all the reasons why you need money? Well, if that’s the case, the cash loans are your best ally.
Once you apply for a cash loan, you can be approved within 24 hours, with the fund on your account. Even though they are highly convenient, cash loans come with a certain risk. Therefore, before you rush out to get a cash loan, we will review a couple of cons you should be aware of.
Initially, cash loans were designed as a temporary solution to help people in case of emergency. However, nowadays, many lenders have changed their terms and conditions, and they offer loans with more extended repayment periods.
But, they all have one thing in common, high-interest rate. Considering they don’t require any collateral, these types of loans are regarded as high risk by the lender. To cover that risk, the lenders apply high-interest rates. For that reason, you should resort to cash loans only in the time of necessity and absolute need.
No part payment
The majority of lenders don’t provide part-payments, which means you will end up returning the loan for the entire tenure of the loan. In the end, this can be very expensive, considering your initial installments go toward interest payment.
Good credit score
Even though many lenders claim a good credit score isn’t necessary, a lot of them insist that borrowers should have an excellent credit rating. Cash loans are quite risky, and usually, people with bad credit history resort to them. This is one of the reasons why lenders require borrowers to have a good credit rating.
In this way, credit score acts as a guarantee and in some way, ensures you will repay the loan. Therefore, if you have a poor credit rating, then your application might be rejected, but that’s not always the case. If you still get approved, then the interest rate will be much higher, and you won’t be able to get a large amount. The lender can also impose stricter terms and conditions.
Should you take a cash loan?
No one can answer this question because it entirely depends on you and your circumstances. For example, if you have a pressing need for cash, and you don’t have any other options, then a cash loan is certainly recommended. When you compare cash withdrawals using the credit card, it’s far more expensive than a cash loan.
On the other hand, if you have some assets, such as property or bonds, then you should take a traditional loan that offers much lower interest rates. However, not many people are in a situation to take conventional loans due to a poor credit rating. For that reason, they often opt for a cash loan, which is a more convenient solution, despite a high-interest rate.