What is a cash advance loan? Is an installment loan a good idea?

A cash advance loan is money borrowed very short term. Just until your next payday in fact. Cash advance loans are often called ‘payday’ loans. An installment loan is simply money borrowed too but is repaid in time, on time, with an agreed number of scheduled repayments, usually monthly. The term of loan can be anything from a few months to as long as 30 years. A mortgage is a type of installment loan but secured against the borrowers property.
For any loan, whether it is a cash advance or an installment loan is only a good idea when you are sure you will have the cash flow to repay it.
Are cash advance loans a way to avoid a negative bank balance? Certainly they are and there is problem in using cash advance services as long as you are sure of the money coming in to meet the repayment. It is probably better to pay your bills with a cash advance loan than to give your credit score a dent because you failed to pay that bill.
The big drawback with cash advance loans is they are just too expensive. The typical APR is between 350 – 650% according to the Consumer Federation of America. In cash terms this means that a cash advance loan of $100 means a repayment of between $115 and $130. Then of course failure to repay on time will mean a rollover loan and an additional fee every time the borrower has to roll it over. Rollover 3 times and it could cost $160.
Cash advance loans could be a slippery slope to more debt. If you find yourself in need of a cash advance loan there you are also in need counseling from non-profit debt relief organizations. Such advisors can help with cutting your current interest rate charges and your monthly repayments.
So if you find yourself relying on cash advance loans between paydays you should see it as a sign of deeper budgeting problems and look for the services of a certified financial planner who can help you get back on track and avoid the use of credit.
An installment loan is a preferred alternative to a series of cash advance loans and so it is a good idea in this sense. A far better idea than either is to seek out and implement as many money saving ideas as possible.


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