Disadvantages of Cash Loans

Although cash loans come with a list of benefits, they also contain a list of disadvantages for the borrower as well. It is a good idea to make sure that you thoroughly understand how this process works and weigh the pros and cons so that you can make the right decision for your situation.

It goes without saying that any type of loan is one that is supposed to be paid back. For those that are in financial restraints already, getting a cash advance is often a temporary fix but does not provide a permanent solution to their money problems. Oftentimes people will misuse the short term loan and end up putting themselves into a bigger hole of debt than they had to begin with. This is typically the case for those with bad credit. Because lenders do not check their credit histories, they may end up approving a loan that the borrower is not able to pay back later on.

Another disadvantage that comes with cash loans is the fact that the lenders usually have very high finance charges for each loan. Ranging from 10 % to 30%, most people will find that the original amount of their loan will be greatly increased once the finance charges are added on. For those that are unaware of this, it can make for a rude awakening once the lender takes the full amount out of their bank account.

One of the catches to using cash loans is the fact that the borrower is not able to borrow as much as he/she wants. Lenders place strict limits on the loans they offer. If your situation calls for a large cash amount, the lender might not approve you for it.