Cash Loan: Benefits and Flaws

Cash loans, are the ones which provide you with instant money and the borrowers agree to repay the sum at some interest rate and are repayable on a certain date which is pre-decided by the lender and the borrower. There are many types of cash loans ranging from traditional bank loans, payday loans, short term loans etc.

The basics about cash loan is that the amount herein involved is much smaller than the other types of loans which are being availed by the individuals. The borrowing capacity usually depends on the earning capacity of the individuals. The lenders, in this case, are not much concerned about your history of earnings or what is the status of your assets and liabilities, as they are more concerned about the earnings of today as this loan needs to be repaid in the near future. However, with so many conveniences of easy cash availability, it comes along with a high amount of fees, which is in the form of high interest or processing charges which are being charged by the lenders for making the cash available for the borrowers in short time.

easy cash loans

Cash loan is also called as a payday loan or a payday advance. Like any cash loan it is a small, short-term unsecured loan, i.e. the loan is being given against no security. It is not even necessary that the loan may be linked to the borrower’s payday. However, the payday advances are generally offered to the consumers who has sound payroll and employment records. Payday advance loans rely on the consumer having previous payroll and employment records.  The regulation relating to the payday loans varies from one country to the other, and even from one state to the other keeping in consideration the local conditions.

Restrictions are being levied on the lenders, regarding the interest rate, which is being charged from the borrowers, this is being done to protect the interest of the borrowers and to check if they are not being charged too high.

Advantages of cash loans

  • Borrowers are able to avail the cash loans quickly understanding their urgent requirements.
  • Lenders are able to earn a lot of fees, as a huge amount of risk is involved in such type of loans.
  • The task is less tedious as compared to the other loans, as it involves less or no paperwork and people are not required to get involved in this cumbersome job.

Liquid assets are available in the market and are offered to the ones who are in need of it, hence maintaining the flow of cash in the market

Disadvantages of cash loan

  • They do not give you any rebate while the calculation of tax, unlike in the case of housing loans which gives you exemption from the tax. Hence it is one of the biggest flaws of this loan, and the taxpayers who are willing to save taxes should not opt for taking this loan.
  • The loan amount which is being dispersed to the borrowers are rounded off to the hundreds of dollars, and it sounds impractical in cases where loans are required to be against a number of purchases involving huge amounts. Hence this rounding off figure can go for large amounts, leading to a large section of the loan just being the rounded by the figure.
  • And finally, the biggest one and that is the high charges which are being levied on the borrowers which avail the benefit of getting the easy cash. Even though cash is being provided easily, but the interest and the charges are too high, which makes the borrower reluctant from taking the cash loans.