If you have poor credit, cash advances can be a good lending option. They often come with less strict credit score requirements, and you can get them within the same day you apply. But keep in mind that cash advances have some costs and fees to be aware of. If you decide to take out this type of loan, it’s wise to minimize these costs to ensure you can pay the loan back. In this article, we’ll dive into how cash advances for poor credit work, some cash advance costs, and a few ways to minimize them.
How do cash advances for poor credit work?
Cash advances are short-term, small-dollar loans that can help tide you over until payday. These loans are usually due within two to four weeks, depending on when you receive your next paycheck. Cash advances don’t require a great credit score, making them a good option for borrowers with poor credit. Cash advance lenders often look at your income and employment history in addition to credit score before approving you for a loan.
Cash advance costs
Cash advances are fast and accessible for borrowers with poor credit, but they can get expensive if you aren’t careful. Here are some cash advance costs to be aware of:
Interest and finance charges
Interest and finance charges are the cost of borrowing money, represented as a certain percentage of the loan. Generally, you’ll have to pay the interest or finance charge back at the same time as the rest of your cash advance.
If you repay a cash advance late, you may owe a late fee. You can extend your loan in some states by rolling it over for another two to four weeks, but the lender may charge you fees to do so as well.
How to minimize the costs of cash advances
If you need a cash advance for poor credit, make sure you follow these tips to minimize its costs:
Budget for the loan ahead of time
First, you should budget to repay the cash advance ahead of time. Make sure you reduce your expenses for when your next paycheck comes around so that you have enough of the funds left to repay the loan right away. Also, you should try to avoid rolling over the loan, if possible, since you’ll have to pay extra fees if you do.
Pay back the loan on time
When the loan comes due, be sure to pay it back on time. This can help you avoid late fees and other potential penalties.
Cash advance lenders may offer different rates and terms for the same loan amount. Make sure to shop around and compare a few of these lenders to find great rates.
The bottom line
Cash advance loans can help you get the funds you need if you have poor credit, but you should be careful about the interest and fees. Make sure you budget for the loan ahead of time, pay the full amount back when it’s due, and avoid rolling it over if you can. Additionally, compare multiple lenders to see what terms you can get. Shopping around and finding a few different offers can help you pick a loan with more favorable rates and terms.
Notice: Information provided in this article is for information purposes only. Consult your financial advisor about your financial circumstances.