What are the Pros and Cons of Cash Loans?
- Cash loans are an easy way to handle an unexpected financial situation
- Easy application process is only one of the pros of cash loans
- Are the interest rates on cash loans justified?
Cash loans as an alternative source of funding is an excellent way to get hold of cash quickly to tide you over till the next pay check or to handle unbudgeted emergencies.
However, before applying for a cash loan, you must have the full picture of what you are getting yourself into. You need to understand the costs of the loan and how it would impact your finances.
To help you make informed decisions, we have outlined the benefits and cons of taking out a cash loan.
Pros of Cash Loans
Easy to apply online
Today in the UK, you can request for cash loans right from the comfort of your home or while on the go from your smartphone, since most cash loans are straightforward, easy to apply and online.
In most cases, all you have to do is visit the lender’s website, select a loan amount, then apply for the loan.
Usually, you will be required to create an account on the site. Be sure to fill in your details accurately, upload any supporting documents to expedient the processing, and submit your application.
This easy online process is a complete contrast to what you’d experience when you apply for a bank loan. Often, when you want to take out a traditional loan you will need to go to the banking hall and perhaps queue for your turn to be attended to; then, you will be made to sign a ton of tedious, boring paperwork.
It is non-binding to apply
After you have applied to a lender, you can cancel the loan request and walk away or, even go to the next lender without any penalties.
There are no binding agreements to keep you stuck with one lender. Hence, you can easily shop the market for the best deals available.
You get a quick response about the status of your loan request
You don’t have to wait for weeks to know whether your loan was approved or not. Most cash loan providers will let you know instantly about the status of your request. Others will take anything between 24 to 48 hours to get back to you on the status of your application.
Unlike traditional loan applications, where it can take upwards of several weeks to know whether you’re qualified for the loan or not.
Fast pay out
Once your loan request is approved, you will be credited directly to the bank account you provided.
Most cash-loan lenders advertise instant pay out on their website. So, you can be sure you will get the money without delay.
Cash loans don’t require collateral
No valuable asset to borrow money against? No problem. Cash loan lenders don’t need any guarantee before they approve your request.
Usually, these lenders only have to make sure you have the means to pay back the loan and the interest accruable.
By showing proof of employment and that you are expecting a pay check soon is enough to qualify you for the cash loan.
If perhaps, you are a business owner, presenting your transaction history and or uncleared invoice receivables are enough evidence to have your request granted.
Now, this is an exact opposite of the requirements to access a loan from a bank or other conventional lending services where the loan is often secured by personal property.
No hard credit checks required
One critical factor driving the growing popularity of cash loan is the fact that lenders usually don’t take a person’s credit history into consideration when accessing their suitability for a loan.
Unlike bank loans where you need a good credit score to be approved, cash loans don’t check your creditworthiness.
However, keep in mind that repaying your cash loan on time won’t help rebuild your credit. Plus, you might pay higher interest if your credit is terrible as the lender would be taking on more risk lending to you.
No restrictions on how to use the money
Unlike other loans such as a car credit or mortgage where you are required to only use the money for the specific purpose of either paying for a car or house, you are free to use a cash loan as you see fit.
You can use a cash loan to consolidate all your debts into one. This way, you can better manage your debt by having to make only one payment instead of servicing several loans at a time.
It’s pretty easy to find cash loans that match your needs
Cash loans are flexible, which means you can easily find loans that meet your needs. Whether you are looking to borrow a small amount as little as £100 or a significantly large amount up to £10000, or perhaps, you want a loan with a longer payment term you can easily find the product that is best suited for your situation.
While shopping for the perfect lender, be sure to deal with only the Financial Conduct Authority (FCA) accredited dealers.
You can easily compare APR rates
You don’t have to spend a ton of time visiting the individual site of each lender to compare rates. Cash loan comparison websites have simplified the process for you.
All you need to do is visit a cash loan comparison website such as moneezy.com and check out the rates for most of the FCA accredited lenders in the UK.
Cons of cash loans
Cash loans often have higher interest rates than bank loans
High-interest rates are probably the only downside to taking out a cash loan. The reasons, however, is not far-fetched.
Since cash loan dealers don’t require collateral, nor do they check your credit history when assessing a request, they usually take on more risk. In order to make the transaction make business sense to them, they typically charge high interest on the loans.
Another reason for the high-interest rate is because the loan is often paid back within a short time. So, before taking the credit, you may want to calculate the amount you will pay back and be sure it is something you can comfortably repay to avoid surprises.
No bank advisers
You are usually on your own when making the decision to take out a cash loan. Lenders are not obligated to provide you with financial advisers, unlike in the bank where you will be assigned a professional who would walk you through the loan details before signing.
To wrap up it is perfectly OK to be in a situation where you need money urgently, but you don’t have it. It is part of life.
However, what is not OK is not knowing the various options available to you to get your financial life in order. Use a loan comparison site like moneezy.com to compare loans, it is free and easy to use.