When to Use and When to Avoid Cash Loans

When to Use and When to Avoid Cash Loans

By Celine Potrov  |   Submitted On August 03, 2014
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It can be quite difficult to decide on the right financial solution especially if you are in an emergency situation. The cash loans can be a great choice given that they are super quick and easy to get. Indeed, they can be quite useful in many situations. However, in some cases they may make things worse. Use some practical information and advice which will help you to use these credit products effectively without falling into traps.

Understanding Cash Loans

You need to have a precise idea of how these credit products work in order to be able to utilise them effectively. You can borrow small amounts within the range from $100 to $1,000. The interest rate is charged daily instead of weekly or monthly. This is the main reason why these loans have very short terms, usually between one and six months.

In order to qualify, you need to earn a sufficiently high employment income to repay the amount which you will borrow. The whole application process takes place online while the approval typically takes just a few hours. The cash can be in your bank account overnight.

Effective Use

The cash loans are designed for resolving financial emergencies and this is what they should be used for. You can use such a financial product to pay for repairing your car when it breaks down in the middle of the month or for making urgent home repairs. Similarly, you can use such a loan when you need to pay an unexpected dental or tax bill. You can also finance the replacement of an important home appliance.

Basically, these are one-off solutions. You will have to set aside a portion of your income for one or several months in order to pay back what you owe, but your obligation will end quickly and you will enjoy perfect financial freedom once again. You will not have to remain a borrower for years.

There are some cases in which cash loans are certainly not helpful solutions. If you spend more than you earn every month and you have difficulties with managing your budget almost all the time, such a credit product will not resolve the problem. You need to find a way to earn extra income and to cut your spending as much as possible.

These loans are not suitable for repaying existing debt either as you will most certainly end up owing more without having extra income to pay. For resolving this type of problem, you should consider a consolidation loan or debt management.

When you use cash loans appropriately, you will benefit greatly from them and stay out of financial trouble.