Cash advance loans for bad credit are one of the best sources for emergency cash when addressing unexpected expenses like cars and hundreds of others.
There are many benefits to instant cash advance, including quick approval, disbursement, no required collateral, flexible use of funds, and credit building opportunities for bad credit borrowers.
Continue reading to learn more about how to find the best cash advance loans for bad credit, including their pros and cons, frequently asked questions, and a word on money management strategies like automating savings and strategically paying off debt using the avalanche and snowball methods.
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What are cash advance loans for bad credit?
Cash advance loans for bad credit are short-term loans of up to $1,000, repaid anywhere from two to four weeks (although you may see a rare one go past several weeks, especially with rollovers), allowing individuals greater breathing room in paying off emergency expenses.
Here are the main characteristics of bad credit cash advance loans:
Sub 35.99 per cent APRs. Bad credit cash advance loans typically straddle the 31 per cent to 35.99 per cent APR range, representing the upper threshold for borrowers with 300 to 580 credit scores. Anything above that and you're entering predatory rate territory, clearly not worth the trade-off, even with bad credit.
Smaller loan amounts. With these types of loans, expect loan amounts to be at most $10,000. Although you can receive multiple competitive loan offers from at least three direct lenders on sites like MoneyMutual and FundsJoy, not all will grant your desired loan amount (subject to your creditworthiness, state laws, and lender policies).
Extended repayment terms. Unlike traditional local neighborhood cash advance places, online lenders offer extended repayment terms of up to 72 months. However, you can expect higher overall interest costs the longer the term goes, so we encourage you to keep repayment periods to no more than three years (or even less with higher amounts).
Strong regulation. Fortunately, states have mandated maximums payday lenders can offer with restrictions on terms, finance charges, and the number of loans one can take out consecutively.
For perspective, here are all of the states that have heavy restrictions on payday lending or have banned payday lending outright:
- Arkansas
- Connecticut
- Georgia
- Maryland
- Massachusetts
- New Jersey
- New York
- North Carolina
- Pennsylvania
- Vermont
- West Virginia
Here you can learn the specific statutes for payday loans in your state.
Pros and cons of cash advance loans for bad credit
Here are the pros and cons of cash advance loans for bad credit:
Pros
Swift processing. Unlike traditional bank and credit union loans that can take up to seven business days to clear, credit cash advance loans allow for quick turnaround with same day approval and funding by the next business day.
These types of loans can provide much-needed relief with time-sensitive scenarios like auto breakdowns, being stranded, or a looming deadline on a rental security deposit.
Flexible use of funds. Unlike mortgages or student loans designated for a specific purpose, bad credit cash advances offer nearly unlimited flexibility, allowing borrowers to do everything from paying for emergency road services to much needed bathroom/kitchen renovations.
Protections. Given the ultra-competitive nature of payday loans, every state has mandated statutes that govern the maximum APRs, repayment terms, and financial charges assessed by lenders. It helps reduce the chance of predatory lending terms.
In a world where 300 per cent and 40 per cent APRs exist at local/traditional cash advance places with exaggerated marketing jargon and splashy banners promising " guaranteed rates," consumer protections help put more money back in your pocket.
Cons
Inconsistent fine print. Unfortunately, many cash advance lenders have yet to catch up with refining their disclosures and policies. The fine print at the bottom of web pages may leave something to be desired, such as missing physical addresses, no implications of non-payment, poorly written advertiser disclosures, and other information consumers can use to make an informed decision.
Higher than average interest rates. Unfortunately, cash advance loans do not have the lowest APRs. Rather than the 8 to 11 per cent APRs enjoyed by Excellent to Very Good credit borrowers, bad credit borrowers should expect 31 per cent to 35.99 per cent, an unfortunate cost of doing business for higher-risk borrowers.
Despite the higher-than-average interest rates, there are many steps you can take to minimize damage, such as paying off your entire due balance in full by the monthly due date. You may also rely on loan apps like Earnin, Brigit, and Dave, which offer 0 per cent interest cash advances of up to $100 per day or $750 per pay period, paid back with your next paycheck.
Impact on credit score. If you lack financial discipline with occasional missed payments, expect negative marks on your credit report. Even a single missed payment can result in a 50 to 100-point drop, putting you squarely in 30 per cent+ APR territory across all of your lines of credit, including balance transfer credit cards.
By carefully weighing the advantages and disadvantages of taking out cash advance loans, you'll be in a better position to address any short-term financial need adequately.
Tips to get cash advance loans for bad credit
To find the best cash advance loans for bad credit, we highly recommend using the following strategies:
Get a feel. Before taking out any cash advance loan, carefully review all terms and conditions— pay close attention to interest rates, repayment terms, and fees like origination, application, or prepayment penalties. Forget about solely looking at APR and understanding the total cost of borrowing.
Additionally, learn what different types of loans are suitable for. For short-term emergency cash, go with cash advance loans. In contrast, larger purchases can benefit from Buy Now Pay Later services (e.g., Affirm) and financial education resources come from payday alternative loan (PAL) programs via credit unions.
Check your credit score. The number one thing traditional lenders look at is your FICO credit score, graded from 300 to 850. The higher your score, the lower the interest rates you are eligible for. Be sure to visit annualcreditreport.com and pull reporting from the three major credit bureaus — Experian, Equifax, and TransUnion.
Do you see any discrepancies or inaccuracies? If so, file a dispute with the bureau or creditor in question. Some of the most common errors include incorrect accounts, inaccurate personal information, and accounts mistakenly marked as open that should be closed and vice versa.
Use a loan referral service. Rather than apply individually to several traditional banks and credit unions, use an online marketplace or loan referral service that can instantly match you with hundreds of participating direct lenders. Some of the most popular ones include MoneyMutual, FundsJoy, NextDayPersonalLoan, and MarketLoans.
Note: these loan referral services are strictly intermediaries that do not originate or process loans. Instead, they collect a small fee or commission in exchange for every successful loan application with deposited funds. It's up to every borrower to vet each direct lender thoroughly by typing in its name on Google and browsing third-party reviews from satisfied and dissatisfied customers.
By using a legit online marketplace, you can simultaneously compare and contrast multiple loan offers. It's an excellent time saver!
Read the fine print. Never hop on a direct lender website without scrolling down to the bottom footer and reading/rereading the fine print. It's important to ensure regulatory compliance, confirming interest rates/fees and any state-specific regulations that could affect your terms and rates.
Additionally, we're big fans of fine print with robust advertiser disclosures that let you know how your information may be shared with third parties. Likewise, security and privacy policies help protect you against potential data breaches that work toward identity theft.
Test customer service. At a minimum, there should be two communication methods on any direct lender website, preferably email and phone number. To take it a step further, we recommend contacting each direct lender individually and testing response times and communication Style.
Review third-party sites. Third party review sites like the Better Business Bureau and TrustPilot are critical sources of information to understand how consumers feel about a particular product or service. For example, cash advance apps like Earnin, Brigit, and Dave have amassed hundreds of thousands of positive App Store and Google Play ratings, with users advocating for their speedy transactions, excellent customer support, and robust budgeting tools.
As always, take the one-star and the 5-star reviews with a grain of salt. It's essential to avoid the extremes and focus entirely on the two-star, three-star, and 4-star reviews, just as you would any other service provider.
Six debt management tips
To become a more savvy consumer with virtually no reliance on cash advance loans for bad credit, it's essential to stay on top of your finances with basic debt management techniques.
To jump start your financial health, here are five of our favorite debt management tips:
Automate payments. By automating payments over a long time, it’ll eventually feel like " out of sight, out of mind” so that you do not miss the money being withdrawn. It also helps avoid missed due dates and contributes favorably towards 35 per cent of your FICO score, which accounts for payment history. Remember, even a single missed payment could drop your score by 100 points or more, which can take several years to recover from.
Negotiate with creditors. Is the interest rate you pay too high? You may have leverage in negotiating with creditors if you have consecutive on-time payments.
If creditors are unwilling to lower your interest rate, try to have them increase your credit limit. This trick can boost your credit utilization ratio (assuming spending remains the same), accounting for 30 per cent of your FICO score. Even minor wins can help a lot!
Consolidate your debt. One time-tested strategy for debt relief is debt consolidation. Debt consolidation implies combining multiple debts into a single payment. Lines of credit you can consolidate include but are not limited to personal loans for bad credit and balance transfer cards.
Consider balance transfer cards. One neat trick you can use to manage your debt is to take out a balance transfer card. Balance transfer cards allow you to consolidate multiple high-interest rate credit cards into one card. Upping the ante is 0 per cent introductory APR periods that allow you to accrue no interest on any transfer balance for up to 21 months (depending on the card issuer).
The benefits of using balance transfer cards include potential cost savings, a simplified repayment strategy, and a boosted credit score if you make regular on-time payments.
We recommend that you pay off the full outstanding balance before the end of the promotional period. Otherwise, you'll pay interest on whatever is left of the transferred balance.
Debt settlement. Have you racked up thousands of dollars in debt? If you've had an open account for some time, you can negotiate debt settlement with creditors for less than the total amount owed. For example, if you owe $8,000 on a single account, creditors could be willing to settle your debt in the $5,000 to $6,000 range.
Moreover, you do not need to sign on with a debt settlement company to see this through. Negotiating on your behalf can be as effective if you have the correct number to call.
In short, automating payments, negotiating with creditors, consolidating debt, focusing on balance transfer cards, and keeping an eye on debt settlement are our five excellent ways to manage your debt effectively.
Snowball vs. Avalanche methods. The snowball and avalanche methods are two ways to manage debt. The snowball method aims to pay off the smallest debt balances first, whereas the avalanche method prioritizes paying off debts with the highest interest rate first.
In short, the snowball method provides more of a psychological boost, whereas the avalanche method offers better cost savings. Which way is better for you? In our opinion, it's the method you find yourself most consistent with, similar to how you would approach a diet or exercise program.
Frequently Asked Questions
Can I borrow money with a 500 credit score?
It is possible to borrow money with a 500 credit score. We highly advise that you refrain from going for payday, auto title, and pawnshop loans. Instead, rely on loan referral services and online lenders that can offer the best cash advance loans for bad credit, complete with sub 35.99 per cent APRs, extra long repayment terms, and no outrageous penalties to keep you in a debt cycle.
What is the most accessible loan to get with bad credit?
Three of the most accessible loans to get with bad credit are payday, auto title, and pawnshop loans. However, the latter two are unsecured loans, meaning you'll have to put up collateral like a vehicle or money market account to receive funds. Be sure to pay your debt by the due date to prevent lenders from seizing your collateral and selling it to recover all or a portion of the loan proceeds (leaving you high and dry!)
Instead of those three, opt for loan apps, personal loans for bad credit, and Buy Now, Pay Later services for larger purchases at your favorite online retailers.
Where can I borrow money instantly?
One of the best ways to borrow money instantly is using a cash advance app like Earnin, Dave, and Brigit. They offer cash advances of up to $750 per pay period, which you agree to pay with your next paycheck. However, be mindful of its limitations.
Cash advance apps have ultra-short repayment windows of two to four weeks (or until your next paycheck), and extra fees may apply past the 0 per cent APR introductory period. It's strictly an option to cover paycheck gaps, not significant unexpected expenses like auto repair or medical bills.
Which loan app is legit?
Three legit loan apps are Earnin, Brigit, and Dave. All three have achieved hundreds of thousands of positive App Store and Google Play reviews advocating for their services, allowing users access to their wages before the next paycheck. They offer initiative smartphone apps, easy linking to a bank account, and extra features like credit building tools and up to $1M in identity theft protection to keep you grounded.
Conclusion
In short, finding the best cash advance loans for bad credit is not difficult. By performing a little leg work and identifying legit lending opportunities, you'll be on the path to minimizing any chances of falling into a vicious debt cycle, covering your emergency expenses with ease.
Disclaimer: The information provided in this article is being provided solely for promotional purposes and should not be construed as investment, tax or legal advice.