Cash Advance Loans: Everything You Need to Know

Emergencies, like sudden medical expenses or urgent purchases, can sometimes throw you off balance even if you have decent savings. In such moments, getting a short-term credit might be a godsend. Cash advance loans, for instance, provide an alternative to traditional long-term loans without requiring a credit check.

But are instant loans really worth it, or should you only use them in emergencies? Let’s review their pros and cons, explore the typical payment terms, and examine the unique challenges they can solve or create.

How a Cash Advance Works

A cash advance loan is an opportunity to quickly get some financial assistance to cover expenses in your account or card until the next paycheck. Typically, the lender is an independent service or a non-bank institution. The good part about these loans is that you do not have to wait weeks for your application to be processed. You simply need to follow a few simple steps and the money is yours (well, for now).

Fill Out an Online Application

Can I do a cash advance online? Yes, you can, and that’s by far the most common way to apply for one. Review your options, find the provider that offers the best rate on their online advance loans, and specify the amount of money you want to receive. Don’t forget to consider whether you can manage the interest fees, which typically range from 3% to 5% of the amount you withdraw, with a minimum fee of around $10.

Next, submit your application in the appropriate online format via the mobile app or the service’s website.

Keep in mind that you will face repayment with significant interest that will accumulate literally every day the payment is delayed. Therefore, calculate in advance whether you can handle the proposed fees before applying for the loan.

You can also obtain a cash loan directly from a bank, such as Discover. Depending on the amount you need, you may be asked to provide certain documents and specify the purposes for which the funds are required, among other details. The process may take some time, but this option is somewhat safer than third-party platforms and generally has lower repayment rates.

Provide Employment and Income Information

Enter your details to receive a personalized calculation of the term of repayment and loan amount.

Based on your income level, you will be offered several lending options to choose from. Select the amount that will help you cover expenses without placing too much strain on your budget.

Allow the Cash Advance Company to Access Your Bank Information

You must disclose your banking information to the lender to verify your solvency. If their assessment is positive, you will receive the designated amount in your account.

Please note that the provider may use your data to generate personalized offers, sell it to third parties, and more. Therefore, you should first review the privacy policy of the credit service and decide if you are comfortable sharing your private information with them.

Advantages and Disadvantages of Cash Advance Loans

Some key advantages of cash advance loans online include:

• Instant access to finance. Loan-specialized platforms can provide you with cash or electronic funds on your card within minutes, which can be a life-saver.
• Convenience. You don’t even need to leave your home to get a loan. Simply submit an application, provide some details, and access the funds.
• No direct impact on your credit score. Services from specialized platforms don’t affect your credit rating, as they are effectively lending you money rather than issuing a traditional credit. As a result, the debt isn’t reported and doesn’t require prior borrower checks.
• Ability to make urgent purchases. Some needs, like a leaking plumbing fixture, broken furniture, or critical repairs, won’t wait for your monthly paycheck. An instant loan is a relatively simple solution to such pressing issues.

However, no matter how appealing these offers may seem, they come with several significant drawbacks, including:

• High fees;
• Disclosure of banking information to third parties;
• Short repayment terms;
• Poor loan conditions;
• Hidden fees and interest rates.

Despite all of this, a cash loan advance is often the only way to access funds before payday if your bank doesn’t have a similar service.

Typical Repayment Terms

Since personal cash advance loans are always short-term, the repayment period is quite limited. Typically, the loan must be repaid by the day following your next payday. You can either pay off the debt yourself or allow the service to automatically deduct it from your account. Missing a payment deadline by even one day can result in penalty fees, which are often disproportionately high relative to the loan amount.

For individuals with good or excellent credit scores, a personal loan is often a smarter choice than a cash advance. Personal loans typically offer lower interest rates.

How to Get a Personal Loan with Discover?

Thankfully, one of the most powerful banks in the US allows its clients to obtain a personal loan from $2,500 to $40,000. Discover offers far more favorable loan terms than typical online services. However, this option is not perfect either, as it impacts the user’s credit history and score.

Here’s the basic process for applying for a loan at Discover.

Prequalify for a Loan

Use the basic calculator to find out your loan options and their associated debt obligations. You will need to provide the following information:

• Intended use of the loan;
• Loan amount;
• Planned repayment period;
• Personal information for processing the request.

After you’ve done so, you’ll receive an interest calculation for the loan and an offer to proceed with a loan application.

Formally Apply

Alternatively, you can assess your chances of getting a personal loan by submitting a pre-approval application via Discover’s mobile app or the bank’s website.

To do this, provide the following information:

• Income and employment details for verification;
• Bank account and routing numbers for direct deposit;
• Balances and accounts of your creditors if consolidating debt.

Wait for a notification on the application review results or a call from a specialist if additional details need to be clarified.

Send an Application

Submit an application through the mobile app or the bank’s website, or visit the nearest branch. Choose how you’d like to receive the funds (on a card or in cash) to complete the process.

Do Cash Advances Impact Your Credit Score?

No, cash advance personal loans do not directly affect your credit score. However, there is a subtle indirect impact. For example, if you fail to repay the loan on time, you’ll face considerable penalty fees, which can easily lower your credit score.