Getting an online cash loan can be a total lifesaver when you find yourself in a situation where your bills are coming in faster than your paycheck. Even if you’re great at budgeting and you know how to manage your money, life can still come at you quickly.
You might be considering the idea of taking out a cash loan, which is often referred to as a payday loan. However, if you find yourself in a pinch, this is not always the best idea. While these cash loans are an easy way to get fast cash, they can cost a lot more than you think.
This guide is going to give you a breakdown of what cash loans are. We’ll also provide you with alternatives that could suit your needs a lot better. We’ll also show you how to get up to $250 quickly and safely through Instacash from MoneyLion.
Table of Contents
What is a cash loan?
Cash loans are short-term loans that you can use to cover unexpected expenses. These loans are often referred to as payday advances. They get their name because they’re a short-term type of loan, meaning you’re only supposed to use a payday loan until your next paycheck arrives.
Data from the Consumer Financial Protection Bureau (CFPB) shows that most of these loans share a few common characteristics, including the following:
- Lenders often offer other fast-cash solutions, like pawnbroking or check-cashing.
- They’re available via lenders who don’t care if you have the means to pay them back.
- The fees are unclear and excessive under the guise of being service or administrative.
- You’ll have to deal with extremely high interest rates.
- You’re given the option to roll over your loan, which extends your cycle of debt.
You can use the cash acquired from these loans for anything you want, unlike mortgages or auto loans. For that reason and many others, these cash loans can be tempting, especially if you need money to pay off a bill or cash before your next payday. Cash loans are common in low-income areas or neighborhoods where many military families reside.
Cash loans are usually obtained from check-cashing services or payday loan providers rather than through banks or credit unions. Depending on where you live, cash loans may come with regulations regarding how much you can borrow, the types of fees you’ll have to pay, and how long the loan can be open.
How do cash loans work?
Here’s how you can get a cash loan:
- First, you’ll go to a payday loan provider or lender who offers these types of loans either in person or online.
- You’ll tell the lender how much money you need and you’ll write the lender a check for the amount that you borrow. The value of the check you write will also include any fees or interest that you’ll be required to pay in order to borrow the money.
- Some lenders will charge a flat fee or impose an interest rate, though many will charge both. In lieu of a check, you can also sign over authorization of your bank account.
- In exchange, the lender will give you the money that you’ve requested. The lender won’t cash your check or withdraw any money from your bank account unless you fail to pay your bill. The lender will let you know the interest rate as well as any fees associated with the loan, in addition to providing you with information as to when you must pay back the loan.
- The lender returns your check or releases the hold on your bank account once you pay them what you owe.
- Some lenders might offer you the option of rolling over what you owe if you cannot pay back the loan by the due date. In the event of a rollover, you’ll only pay the interest you have accrued and any other fees that you owe by the due date. The lender will allow you to prolong your repayment for another period, though it’s important to recognize that you will continue to collect interest and accrue more fees if you opt into a rollover. Depending on your state, you might only be able to roll your loan over once or twice. In some states, loan rollovers are illegal altogether.
You may want to think twice before taking out a cash loan, primarily because they come with extremely high fees and interest rates. You could end up paying nearly 800% of your loan in annual interest just to borrow money from a payday loan provider.
If you need a loan, a far better option would be to get a personal loan, which is much less expensive. Personal loans are simple, and they are generally very easy to obtain. You can visit your bank or an online lender and request the amount you need to borrow from there.
Like a cash loan, you can use a personal loan for almost anything. However, unlike cash loans, personal loans usually come with much more affordable interest rates.
Personal loans work like this. Let’s say you’ve borrowed $500. You would make an agreement with your lender, like agreeing that over the course of twelve months, you will pay back the $500 that you borrowed as well as a 12% interest rate. Each month, you’ll make a payment to the lender for a total of $44.12, which includes both the principal and the interest.
By the end of those twelve months, you will have paid a total of $533 to the bank. That means you’ve only paid $33 more than the initial $500 that you borrowed, which is much less interest than you’d pay on a payday loan of $500.
For example, let’s imagine that you obtain the same loan from a payday loan provider. The payday loan provider will offer you a cash loan of $500 with an interest rate of 500% annually.
You’ll only have fourteen days to pay back this loan, and there will also be a $50 fee imposed on the loan just for taking out the loan in the first place. You’ll have to authorize the lender to take money out of your account if you don’t pay back the loan, and from there, the lender will give you the $500 in cash.
Fast-forward two weeks. You return to the lender to pay back what you owe. Thanks to the high-interest rate that you agreed to, you now owe the lender the original $500 as well as $104 in interest on top of the $50 service fee.
So, in total, you’ll have to pay your lender $654. You paid a total of $154 to borrow $500 for two weeks. That’s over four times what you would have paid for your loan if you took out a personal loan from a bank instead.
What to look for in a cash loan alternative
There are a few things to look for when deciding what is the best online cash loan or what is the right cash loan option for you. Here’s what you should look for in cash loan alternatives.
Pay close attention to what your annual percentage rate (APR) will be when securing a cash loan. Your APR is the percentage of interest you’ll pay over the course of a year when you take out a loan.
High APRs make it much more difficult to pay back your loan. Look for loans with a reasonable APR so you don’t end up falling even deeper into debt.
Low or no fees
In addition to high-interest rates, expensive fees can make it harder to pay your loan back on time. Look for a lender who offers the lowest fees payday loans, or better yet, no fees at all.
Quick signups and deposits
If you’re shopping around for loans, it’s likely that you need money fast. Look for a lender who offers instant sign-ups and deposits so that you can get your cash right away.
No hard credit inquiry
Even if you have bad credit or no credit at all, it’s still possible to find a great cash loan alternative. You should look for a lender who doesn’t perform hard credit checks because hard credit checks can lower your credit score dramatically.
Payday loan centers usually provide instant funding either in person or via a debit card. But don’t feel like you have to go that route in order to get fast cash. Some personal loan lenders offer instant funding as well.
Instacash by MoneyLion: the premier cash float alternative
Instacash is a cash loan alternative that is easy to get. Plus, it saves you money! With MoneyLion, you can get up to $250 instantly deposited into your checking account using the Instacash feature. With Instacash, you’re basically borrowing money from your future paycheck and you can pay yourself back later with zero interest.
The best part is that you won’t have to worry about paying high fees, and all of the money that you borrow has a 0% APR. This stress-free alternative to a cash loan comes with no hard credit checks and no interest, all while offering instant deposits.
How to get Instacash from MoneyLion
This fast cash online loan alternative is simple to apply for and totally hassle-free. Here’s how you can get Instacash from MoneyLion.
1. Create a MoneyLion account
First, download the MoneyLion app from Google Play or Apple Store. Then, open the app and follow the in-app instructions to create an account. Enter your personal information and upload a quick snapshot of your valid photo ID when prompted.
2. Qualify for Instacash
After you create your account, tap “Instacash” in the app and link your checking account to see if you qualify. Depending on your membership, you’ll have a few options when it comes to accessing up to $250 in Instacash advances, all without any hard credit checks.
3. Request your Instacash
After you have qualified for Instacash, go to the tap labeled “Request” within the MoneyLion app. From there, select the amount of money you need up to $250. Choose the amount you would like to take out and confirm the transaction.
4. Use cash instantly
Your cash will be deposited directly into your checking account, and you can use it however you deem fit. You’ll only have to pay back the amount of money that you borrowed, and you can wait to pay it back until your next paycheck arrives. Plus, you’ll accrue no interest!
5. Get cash again
People with qualified checking accounts will have access to Instacash once every pay period. You can take advantage of the Instacash option as often as you’d like to. All you need is an active MoneyLion account.
Fast and safe online loans
Don’t get taken advantage of by payday lenders when you need fast cash. While these loans can be tempting, they can quickly become a huge financial burden and put you in even more debt.
Even if you have a low credit score or you’ve made financial mistakes in your past, there are a number of options that you can use to avoid cash loans and safely get the money you need. It’s always best to opt for a personal loan or use the Instacash feature from MoneyLion to get the funds you need right away!
Frequently Asked Questions
Is it safe to get a loan online?
With MoneyLion, getting an online loan is completely safe and FDIC-insured. You’ll be protected while you spend, shop, and save with industry-leading safe banking capabilities. You’ll have access to multi-factor authentication, contactless payment options, and full protection against unauthorized purchases.
Where can I borrow money ASAP?
Get the cash you need instantly with the Instacash Turbo delivery option from MoneyLion. You can get your money in minutes by paying Turbo fees, which cost $3.99 if you’re depositing into a RoarMoney account, or $4.99 if you’re depositing into an external account.
Is it better to apply online or in-person for a loan?
Applying for a loan in person is far less convenient than applying online. However, it’s important to make sure you’re applying for a loan from a trusted source if you’re doing it online. When you use Instacash or apply for a personal loan through MoneyLion, it will not only be convenient, but totally safe, too!