What Are the Important Things to Know About Advance Loans
When we speak about advance loans we basically refer to the credit facility which allows you to receive an expected amount of money ahead of its time (or, in advance, hence the name). The money that you receive in advance will come from a source other than what is expected.
For example, you may ask a family member, relative, or friend for a partial amount of your salary. This can be considered as advance loans because you are receiving a portion of the money ahead of time which should come from your salary at a later date. This is basically how you should look at advance loans.
Many people are in need of advance loans for various reasons. The most common of course is that they are strapped for cash in between paydays or there is an emergency expense that they cannot cover with their savings. In these financial emergencies, the benefits of availing advance loans cannot be emphasized enough.
However, you must also realize that there are some unscrupulous companies and individuals who intend to take advantage of people in these types of financial emergencies. This is why it is so important to familiarize yourself with advance loans.
Who can qualify for advance loans?
The first important thing to know about advance loans is how you can qualify. Generally, there are very minimal requirements that are being observed by lending companies to allow you to take advantage of this credit facility. The most basic requirements include:
How will a low credit score affect your application for advance loans?
It is normal that people want to know exactly how a low credit score or credit rating can affect their application for advance loans. This is because majority of traditional financial institutions use this as a basis for approving or declining loan applications. You can even apply for advance loans even if you don't have credit history.
Basically, advance loans do not fall under the classification of long-term lending options. This is why your credit has no bearing on whether your loan application will be approved or declined. In the same manner that it will not affect the type of loan quote that you will receive or the interest rate and terms that the lending company will provide. So there is no distinction between good or bad credit.
How to avoid fraud in advance loans
As earlier mentioned, like in almost any type of industry, there will always be sharks that you have to watch out for. The same is the case when it comes to advance loans. Essentially, because some people do not know that they can avail of this type of credit facility even if they have bad credit scores, they become preys of unscrupulous lenders and become victims of fraud. This is why it is so important to know the details of advance loans.
Basically, to avoid fraud, all you have to do is to speak to expert loan consultants of companies that offer advance loans to find out the specific program they can offer you. Being upfront with these lending companies not only helps you to avoid fraud but will ensure that you get the best options possible.
Differences between bank loans and advance loans
There are basically very few differences between bank loans and advance loans. The most significant from the perspective of the borrower is that bad credit scores can negatively affect your bank loan application whereas it has no bearing on your application for advance loans. Another important difference is that bank loans are typically secured which means that you would need some form of collateral.
On the other hand, advance loans are generally unsecured which means that the simplest form of collateral that will be asked from you is your proof of employment. Lastly, a vital difference is that advance loans get the funds to you faster, normally in one banking day.
When should advance loans be paid?
The answer to do is pretty straightforward. Payment of advance loans should be made based on what is stated in your credit agreement with the lending company. You can make payments earlier than the stipulated date, but never beyond.
For people with bad credit scores, they fail to realize that making on time and updated payments on advance loans can create a positive impact for them. This means that they can actually turn their credit scores around and make more varied types of loans available to them. Extending the payment due date of advance loans is often discouraged.
What are the common types of advance loans?
There are definitely many different types of services in the market that are being offered as advance loans. However, all of these can fall into the common types of advance loans. In general, advance loans can fall under these different types:
Hopefully by knowing the important things about advance loans you can avoid fraud and take advantage of its benefits. Keep in mind that credit facilities like advance loans are meant for emergency purposes only.