3 Types of Loans for Quick Cash
The thing with life is that it throws unexpected curveballs in your path. You never know when a situation may arise wherein you will need cash to help tide over an emergency. You may need money for a medical emergency, to pay for a wedding, or even unexpected educational-related expenses.
One way to deal with financial emergencies is to dip into your savings. The other way is to take a cash loan. A cash loan doesn’t have one definition since its definition is based on the type of cash loan you end up taking. The one defining feature of a cash loan is that it not only provides you with the money you need but you can it get it much faster than other types of loans.
Types of Cash Loans
- Personal loans
- Payday loans
- Credit card cash advance loans
Let’s look at each of these loans in detail. This way you will be able to decide which type of loan suits you the best.
Personal loans are probably the most popular cash loan. These loans are offered by banks and non-banking financial companies (NBFC) for tenures up to 5 years with some banks offering loan tenures up to 7 years.
Personal loans are typically unsecured loans, which means that you don’t have to provide any security to avail the loan. However, since they are unsecured, interest rates tend to be on the higher side. Depending on your loan amount and CIBIL score, you could be charged anywhere between % p.a. and 15.1% p.a. Moreover, the amount you are eligible for is generally based on your income.
If you want to enjoy lower rates of interest, you could consider applying for a secured personal loan, a type of personal loan that some banks offer.
The Downside of a Personal Loan
- If you approach a bank or NBFC, there is more paperwork you will have to complete compared to other cash loans.
- The transaction period is longer when compared to other cash loans.
- You need more than just a few months to comfortably repay the loan.
- You require a large amount of money.
- You don’t need the money immediately and you can wait for up to a week until the loan is disbursed.
Unlike personal loans, payday loans are cash loans which allow you to borrow small amounts of money (ranging from a few thousands to around Rs.1 lakh) which can be repaid as soon as you get your next month’s salary. Some lenders offer payday loans for tenures ranging up to 1 year.
There are many online lenders who provide payday loans with minimal documentation. Most of them even promise same day disbursement of cash. These are short-term unsecured loans.
One thing to keep in mind when it comes to payday loans is that the entire amount you have borrowed along with the interest payable needs to be repaid on your next payday. So, there isn’t any repayment schedule.
Because of the nature of payday loans, the interest rate is quite high. It ranges from 0.5% per day to 1% per day. So, a payday loan of 1 month means an interest rate of around 31% and a one-year loan is around 365% p.a.
The Downside of Payday Loans
- The interest rate is very high.
Credit Card Cash Advance
Ever received a call from your bank saying that you have been pre-approved for a loan on your credit card? If you have, then you were just pre-approved for a credit card cash advance.
A cash advance is very simple to obtain and requires no paperwork. All you need is your credit card. You insert the card in the ATM, put payday advance Marion in your PIN, and withdraw the amount you need. It’s that easy. In fact, you can take a cash advance in any country in the world.
The amount you withdraw is then lumped with your credit card’s statement. You repay the amount you have withdrawn during the next payment cycle.
The Downside of a Credit Card Cash Advance
Now, that you know the benefits and the downsides of these cash loans, you can safely apply for a cash loan that best suits your needs. Before you zero in on a bank or lender, remember to do your research and pick a bank or lender that is right for you.