Multiple banks. Different interest rates. Call it a "conflict of interest".

    Cash Loans

    Cash advance loans are short-term loans that are offered by several banks and non-banking financing companies (NBFCs) in order to help their customers meet their urgent financial requirements. While a customer can choose to opt for this kind of an easy loan through various lines of credit, the most common way to apply for these loans is using credit cards. Most of the credit card companies offer customers the option to avail the cash advance feature through which they can withdraw a small credit in advance through an ATM or over the counter at a bank or NBFC. Customers can also apply for these loans through the phone. The loan applications of such loans can be approved within as less as 1 hour. The repayment tenure of this loan typically ranges from a few weeks to a couple of months starting from the date of loan approval. The terms of the loan repayment is generally mentioned in the loan agreement issued by the lender.

    Features of Cash Advance Loans

    • This is an unsecured loan that can be availed for a short period of time in order to meet any emergency financial needs.
    • Using this fast cash loan, individuals can borrow a small amount of instant cash in order to meet their immediate credit requirements.
    • This scheme does not mandate the borrower to declare the expenditure of the cash borrowed. Therefore, this loan can be used to meet any kind of a financial crisis.
    • These instant cash loans can be availed by both individuals and businesses.
    • These immediate cash loans help borrowers get access to credit instantaneously and without any hassle.
    • The maximum amount that a customer can withdraw as a cash advance loan might be lower than the credit limit offered to the individual by the credit card company. This amount can be further less if the person has a balance on the credit card.
    • The rates of interest and fees charged on this type of a loan vary from lender to lender. Therefore, it is advisable to learn about the terms and conditions of this loan before deciding to opt for it.
    • The Annual Percentage Rate (APR) of this loan is quite high since the risk associated with this financing plan is extremely high. Therefore, the interest rate offered on such loans is quite high.
    • If the borrower withdraws the cash from an ATM, he or she will be charged an additional fee for using the facility.
    • The loan starts to earn interest since the day the amount is withdrawn. There is no grace period available before the loan starts to incur interest. Therefore, the amount that is paid as interest for cash advances is generally higher than any other form of loans.
    • The repayment tenure of this scheme can range between a couple of weeks and a few months.

    Advantages of Cash Advance Loans

    There are a numerous advantages to availing credit through cash advance loans. Check out the list mentioned below to learn about the benefits you can earn if you apply for this kind of loan:

    • The application and approval process of these loans are extremely simple and come without any hassles.
    • A cash advance loan can be borrowed to meet any short-term financial requirement where a traditional loan cannot be availed from a bank or NBFC.
    • This loan offers borrowers quick access to credit in order to help them meet any urgent credit needs.
    • Borrowers have to do minimal paperwork to secure this type of a loan.
    • The customers do not have to declare the expenditure of the funds received using this fast cash loan.
    • Even though the interest rates are typically high when considered as annual percentage rate (APR), these loans can prove to be cheaper compared to other traditional loans when they are paid off on time.
    • The customer does not have to offer any collateral or third-party guarantor as security to receive the funds under this loan.
    • Lenders typically do not check the credit history of the borrower. Hence, this plan can be availed when a person is not eligible for a traditional loan from a bank due to a low credit score or a missing credit history.

    Disadvantages of Cash Advance Loans

    There are numerous reasons that doesn’t make this type of a loan a wise choice for everyone. Learn about the key points one should keep in mind before availing funds using this quick cash loan scheme:

    • This financing method can prove to be more expensive than other traditional loans if it is not repaid on time.
    • This urgent cash loan is not well-suited to meet long-term financial needs as it carries a high annual percentage rate (APR).
    • Using such types of immediate cash loans, customers can borrow only a small amount of funds. If any individual requires a large amount of credit, he or she will have to apply for a traditional loan.
    • When a cash advance is borrowed using a credit card, the individual is bound under a contract in which he or she will not be able to switch the credit card provider until the debt has been cleared off.
    • In case an emergency loan is borrowed by a business under this scheme, the business owner cannot encourage his or her customers to pay in cash to avoid paying a percentage of the sales to the lender. If done so, the merchant might be prosecuted for breaching the contract made with the lender.

    Eligibility Criteria for Cash Advance Loans

    Before you decide to opt for a cash advance loan, it is imperative that you learn whether you are eligible for this kind of a financing plan. Learn about the eligibility criteria for these loans mentioned below.

    For individuals:
    • The borrower must be at least 18 years old.
    • The customer should be a resident of India.
    • The applicant must be a permanent employee of a reputed organisation with a regular monthly income.
    • The borrower either must have an active current bank account to receive the amount or should hold a credit card in order to be able to withdraw the cash from an ATM.
    For businesses:
    • The business owner should be a minimum of 18 years old.
    • The merchant must be an Indian citizen.
    • The turnover of the concerned business should be above the minimum requirement of the lender.
    • The borrower should have an activer current bank account in order to receive the loan.
    • The business must have been operational for a considerable amount of time.

    Documents Required to Apply for Cash Advance Loans

    For individuals:

    • Passport-size photographs
    • Proof of photo identity such as Voters ID, Driving license, Aadhaar card, PAN card, Passport, etc.
    • Proof of age such as birth certificate or 10th marksheet
    • Income proof from the current organisation
    • Proof of address such as Aadhaar card, Passport, Voters ID, Ration card, Driving license, etc.
    • PAN card
    • Proof of citizenship
    For businesses:
    • Know Your Customer (KYC) documents of the businessman along with the concerned firm/company
    • Business address proof
    • Proof of citizenship
    • PAN card
    • Bank statements for 12 months of an active current account
    • All existing loan documents
    • Statutory documents of the concerned business
    • Financial documents of the business for the last 2 years such as Computation Sheet, Income Tax Returns (ITR), and Balance Sheet
    • VAT returns of 6 months starting from the date of the loan application
    • Bank transaction statements of the POS machine for the previous 1 year
    • Proof of turnover containing the details of the latest sales or service tax returns along with a copy of purchase/invoice order

    How to Apply for Cash Advance Loans

    If you are planning to secure a small cash loan using this scheme, follow the steps mentioned below:

    Step 1: You will have to collect the form from the nearest branch or through the online portal of the lender.

    Step 2: Fill out the necessary details in the form and submit it to the lender.

    Step 3: Attach all the required documents as mandated by the lender to apply for a cash advance loan.

    Step 4: Wait for the lender to verify all the details and documents, and approve the loan.

    Step 5: Once the loan has been approved, the approved amount will be credited to your current bank account.

    In case you want to get fast cash using a credit card, you may do so by visiting a nearby ATM and withdrawing the required amount using your credit card.

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