Getting a cash advance probably isn’t your first choice for resolving a financial emergency situation. For most people, getting into a jam is anything but ideal. Trying to get yourself through until payday can be quite a challenge when you have bills that are past due or surprise vehicle repairs to pay before you can get your car back from the mechanic.
In the last few years, a lot of new cash advance apps have hit the market for iOS and Android powered devices, as well as websites for use on a PC or Mac. Of course, some cash advance apps are better than others, as some try to conceal their pitfalls behind big fancy promises.
Getting a cash advance can save you if you’re in a pinch. However, there are a few steps you should take to stay safe while using cash advance apps to help you get your finances straightened out.
Learn How Cash Advance Apps Work
Cash advance apps let you borrow money against your upcoming paycheck. The money you borrow goes into your checking account prior to your payday. Some of these apps partner with employers to make decisions based on your earned wages while others cut that middleman out and work with you, the consumer.
Once your current earnings are calculated, the cash advance app will allow you to take out a small loan. That amount gets deducted from your next paycheck. You might get charged a monthly subscription fee for an app, but there are some that let you pay voluntary ‘tips’ or that have fixed fees on the loans.
Familiarize Yourself with the Lender and Loan Terms
Be sure that you look up the financing company the cash advance app goes through on Better Business Bureau before you input any personal information. You will want to go with the company with the best reputation for integrity in its business practices. Also, try to find out if that lender is licensed by the state you live in since that offers another degree of protection for you.
Always read through the loan terms with careful consideration. You need to know exactly when the loan is to be repaid, not to mention how much you will get charged in fees if you fail to make payments on time.
Pay Attention to Hidden Fees
As already mentioned, some cash advance apps have hidden fees. There are some that say they are completely free, but when they do, they often have hidden fees. They might try to disguise these fees as ‘donations’, ‘tips’, or ‘premium account access.’ So, no, these apps technically are not free.
Make sure you find out what you will be paying and that these seemingly small fees can really add up as time goes on. You might end up paying a large annual percentage rate comparable to what you get charged by standard payday lenders.
Keep Your Documentation at the Ready
Giving out personal information online is always a crapshoot. Cash advance loan apps require you to put your banking info in, so you need to be careful. The company’s website and app connections should all be secure. Look through their data privacy policies before you even sign up.
You should keep all documentation on hand since you could possibly get collections calls years after repaying your loan. Some of these calls appear to be scams to get money from people. Keep all documentation available saying that you repaid your loan in full.
Plan Your Budget
Is a lender asking you to pay a fee before they even give you money? Run for the hills – this is a clear sign of a scam. However, if the cash advance lender seems reputable, you will still want to budget your money out appropriately. Your next paycheck is going to be smaller than usual since the money you borrow goes against that sum. Planning can keep you from falling behind in your next pay period. Making those payments on time can help you build your credit, but getting behind could hurt your credit.
Cash advance loans can be helpful for getting you through to payday. But not all cash advance apps are created alike – some are much more reputable than others. Use your best discretion as you go about looking for an app to give you a small loan.