MoneyLife

Cash Advance vs Loan: What’s Best For Me?

By Lindsey Ryan

Are you in desperate need of cash for upcoming fees and emergencies? Maybe you don’t have an emergency fund but you need to get a hold of quick cash. 

There are numerous borrowing options to choose from, and it can be overwhelming to try figuring out the best option for your circumstances. Today, we’re going to address the basics of cash advances vs loans to get you ahead in the decision-making process.

What is a short-term cash advance?

Cash advances are short-term loans provided by your bank or credit card issuer, and you can use them for anything. Unlike student loans, which are specifically intended for academic payments, you can access your cash advance paycheck online. 

Cash advances are free to use, no matter the circumstances. You can withdraw your cash advance money using an ATM as long as you have a PIN number associated with your credit card. If not, simply visit the bank in person.

To get a cash advance in the first place, you’ll need to apply at your bank. The application process is often seamless, and you can expect to receive your cash within one business day of being approved. However, the exact waiting period depends on your provider. 

Cash advances come with an initial fee between 3% and 5% or $10, depending on which value is greater. They are also known for higher APR than most other loans. It is important to learn about the fees and interest rates associated with a specific cash advance before you apply for it. 

Pros

Cash advances might be your only option when you need cash fast. When emergencies arise, you are encouraged to use your emergency funds, but when they are not available to you, cash advances are beneficial for many reasons.

  • Quick application: When time is of the essence and you can’t afford to take days for your issuer to process your application for a loan, cash advances are the way to go. The application process for cash advances moves quickly, and you’ll get your cash almost immediately. 
  • No penalty for early repayment: This will sound like music to your ears if you’re expecting some cash but you don’t have it yet. You can apply for a cash advance to get money sooner, and then you’ll just have to repay the advance amount prior to the agreed day of payment.
  • No credit check is needed: You don’t need to pull up your credit history to obtain a cash advance. This detail is ideal for people who have poor credit history but need cash fast.
  • Fair interest rate: In comparison to payday loan interest rates, cash advances are a better financial choice due to their lower interest rates.

Cons

While the advantages of cash advances may seem alluring, it is important to be realistic and take note of the downsides to taking out cash advances as well.

  • High APR: Although lean in comparison to payday loans, the interest rates of cash advances are notoriously high. While credit purchases may attract an interest rate of 17% on average, cash advances come with interest rates of up to 27% or more.
  • Extra fees: Cash advances come with an initial fee between 3% and 5% of the money you’ve requested, or $10—whichever is greater.
  • No grace period: Unlike credit purchases, cash advances do not offer grace periods.

Advance cash with MoneyLion

With these disadvantages of cash advances in mind, you’ll need to do research to find issuers and banks with an APR as small as possible. This is why Instacash®️, a cash advance option by MoneyLion, is a safe, easy, and affordable cash advance alternative. Instacash offers you a cash advance up to $250 with as little as 0% APR, which is a stark difference compared to the 300% APR that comes with most payday loans.

What is a cash loan?

Cash loans and advances are a little different because a cash advance is a type of cash loan. Cash loans exist as a way to rescue you when you need access money in a pinch. There are many types of loans but they all fall into one of two categories: secured loans and unsecured loans.

Unsecured loans

Unsecured loans do not require collateral as a prerequisite. Some examples of unsecured loans include:

  • Revolving loans: credit loans wherein the borrower can withdraw a set maximum amount with a specified time.
  • Consolidated loans: a loan borrowed to offset a pre-existing unsecured loan.
  • Term loans: when a borrower receives a lump sum of money and repayment is set to take place over the course of predetermined installments.
  • Personal loans: loans borrowed for personal reasons.
  • Cash advances: short-term loans that can be used for anything.
  • Student loans: loans taken out for academic purposes.

Secured loans

Secured loans require collateral before the bank or issuer will administer the loan. Examples of secured loans include:

  • Mortgages: secure loans with real estate as collateral.
  • Life insurance loans: cash is used as collateral.
  • Vehicle loans: used for the purchase or repair of vehicles. 
  • Bad debt loans: ideal for people with bad debt.

Beware of cash advance loan scams

Predatory lending practices can damage your credit and cost you in the form of hefty debts. Cash advance loan scams include illegal tribal loans, online payday loans, and loans offered outside of your state, among many other unlawful tactics.

How to get a cash loan with no credit

While most personal loans require good credit, steady income streams, and positive financial history, a MoneyLion Credit Builder Loan®️ is ideal for those with low credit scores.

  • Get cash today! You’ll get instant approval and access to funding right away, meaning you can receive a portion of your approved cash advance amount the same day you apply.
  • Up to $1,000. You’ll get an instant approval for a loan up to $1,000 with 0% APR Instacash advances when you become a MoneyLion Credit Builder Plus member.
  • Bad credit? No problem! The Credit Builder Plus loan can help you build your credit score by providing you with a payback plan. By sticking to a plan, you will create a track record of on-time loan repayments.
  • Boost credit by 60 points within 60 days. CB+ loans help you boost your credit score quickly. Banks and credit issuers will report the loan repayments that you make to major credit bureaus. With a CB+ loan and its low APR, you can set up a repayment plan that shows you are never late on payments.
  • Access to 0% cash advances. Approval for Instacash and CB+ loans doesn’t require a hard credit inquiry. Additionally, you’ll have access to cash advances at 0% APR.
  • Effortlessly grow your money. Interest earned in your credit reserve account is put into your fully-managed investment portfolio when you finish repaying your cash advance.
  • Exclusive membership perks. The Credit Builder Plus membership offers perks such as the ability to monitor your credit, track your progress, and invest in a fully-managed account that has no investment minimums or management fees!

Earn cash rewards on your purchases

When you find yourself urgently in need of cash, it is important to carefully consider your borrowing options, especially when it comes to a cash advance vs loans. Make sure you only spend the money on emergency situations, and always pay back the amount you borrow. 

MoneyLion’s cashback programs offer easy ways to earn money on everyday purchases. MoneyLion will also show you how to apply those rewards strategically and lower your debts in the process! 

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Join Credit Builder Plus to get a loan up to $1,000, credit monitoring, exclusive rewards, access to 0% APR cash advances, and more. Over half of members raise their credit over 60 points within 60 days!

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