Understanding the Risks of Applying for Instant Loans

Understanding the Risks of Applying for Instant Loans

At certain points of your life, you may need instant cash and none of your friends or relatives can offer help. As you search for other alternatives, you may come across "instant loans". If you really need the money as soon as possible, this can be your best choice. After all, as its word denotes, instant loans only require a very short span of "waiting period" before the cash gets into your hands. 

The most commonly used and most of the time "abused" type of instant loan is the credit card cash advance. Because of its availability and convenience, many people opt to use it whenever they are in need of cash. The obvious reason behind it is that the person saves one's face from borrowing money from friends and relatives who may not offer help after one asks for it. By using one's credit card, money can be as fast as inserting the card through an ATM machine with only a few seconds waiting time before the money will be dispensed out. This means fast credit with no need to wait for days for the approval.

However, though instant loans are indeed beneficial to the person concerned, it has its own sets of flaws as well. One disadvantage of this type of instant loan is the fact that it incurs a very high interest rate. In fact, this can be higher than the regular charges that you get when you use your card as payment for the commodities that you purchase. In fact, I have experienced one time when the interest is half the amount of the money that I have withdrawn!

Apart from the charges that you will incur from credit card cash advances, you may be subjected to other penalties as well. This can be true if you have not paid your outstanding balance in full. 

Can you imagine the interests that may accumulate when you keep on using these types of instant loans? The fact that you can't pay the total amount billed for the month is enough reason for you to stop using your credit card as well. Many credit card holders who have abused their privilege to loan money end up declaring for bankruptcy when they feel that it is impossible for them to pay the amount in full.

There are other instant loan options that you can choose from nowadays. Some are even intended for people who find it hard to borrow money from banks and credit institutions because of their unfavourable credit history. If we look at the brighter side of the coin, this can be of great help for people who have lost hope in securing the finances that they need. This will help them have the courage to face life against all odds. However, just like other types of "instant loans", this comes with very high interest rate as well. Hence, the person may find oneself in a roller coaster ride, applying for another loan to pay off one's existing debt and fulfil one financial responsibility.

ChanceHub, 2015-05-12 | Posted in loans 1270 views

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