There are many ways to borrow money. Some options include a credit card cash advance, payday loan or personal loan. All have varying interest rates and fees. Knowing the many loan options, you may choose how and when to borrow. Each type of loan has another purpose, dollar amount and payback timeline.
Credit Card Cash Advance
One of the most popular cash advances is a credit card cash advance. It involves withdrawing cash from your credit card limit, and it usually comes with a separate cash advance APR and fee. In addition, it often begins accruing interest immediately. Using credit card cash advances is typically preferable only in emergencies. Credit card cash advances can be made at an ATM, a bank, or sometimes over the phone. They may also come with a special credit card cash advance PIN that you must have to complete the transaction. Many credit cards have separate balances for purchases and cash advances; monthly payments are applied to both. As such, credit card cash advances can be very expensive, and they do not qualify for the same introductory offers available for credit card purchases.
Small Business Cash Advances
A small business cash advance is an alternative to a traditional loan. This financing product is based on your business’s future debit and credit card sales, and repayment occurs through a percentage of future credit or debit card transactions, usually daily until the advance has been repaid. Depending on your business’s sales, these payments can vary, so a cash advance can be more cost-effective than a loan if you have lean times. However, a cash advance will often carry a higher factor rate than loans and can quickly become expensive if you don’t repay it quickly enough. This type of funding also has fewer conditions and requirements than loans, making it accessible to more small businesses than conventional banking options. In most cases, you can receive approval in just a day or two, and even if you don’t have the best personal credit score, you may still qualify.
While payday loans can help borrowers bridge gaps in their finances, they often come with high-interest rates that can trap borrowers in debt. Alternatives to payday loans include personal loans from banks and credit unions, which offer competitive rates and don’t usually require credit checks. Borrowers may also consider a 401(k) loan, which allows them to borrow from their retirement savings. Payday lenders offer short-term unsecured loans due in full on the borrower’s next paycheck for a fee of $10 to $30 per $100 borrowed. This makes payday loans expensive, especially for those who need to repay them regularly. Some borrowers use payday loans to cover emergencies, such as unexpected bills or repairs.
A personal loan is a money from a lender for a set amount of time, with a monthly payment and a fixed interest rate. Most personal loans are unsecured, which means the lender can’t seize any property or assets you own to collect on your debt. Personal loans like the MaxLend installment loans are frequently used to finance major purchases, consolidate debt, or pay off high-interest credit card debt. Business owners can apply online or onsite.
The most common type of personal loan is an unsecured, lump-sum loan with a repayment term between a few months and seven years. Your credit score, income, employment history, and debt-to-income ratio affect how much you can borrow. Some lenders also offer a personal line of credit, which functions like a credit card and is commonly used for home improvements, overdraft protection and larger purchases. These unsecured lines of credit have variable interest rates and can only be repaid when you draw funds from your account.