Everyone wants to have a spotless credit rating so that when they need to finance something, they can get a loan without much trouble. But things don’t always go as planned and you might default on a loan or be a little late in paying your credit card bills. These little things however can add up to a bad credit score. A bad credit score means that the next time you need to borrow some money, conventional loans might not be an option for you anymore. Then you will have to depend on short term loans like cash advances or Cashfloat payday loans to make ends meet.
What most people forget to look at is the interest rates and other fees that you will incur when you take such loans. But if you fail to pay back, your credit score will be affected negatively. These two types of short term loans differ quite a bit when it comes to interest rates.
Cash advance: There are two types of cash advance loans; merchant cash advance and business cash advance. Neither however have interest rates comparable to traditional loans. In case of merchant advance, you will have to pay the borrowed amount and a certain fee, but it won’t be a cash payment. You are required to give them a percentage of your sales. There is no increase in the rate due to increased repayment time, which is a big plus, as you will not have to worry about an increased debt burden.
Payday loans: Most lenders like Cashfloat require you to pay the loan back within 2 weeks. There is no standard interest rate; instead you are charged a fixed amount of $15 to $30 for every $100 you borrow. This is a steep rate but since there are no collateral for these loans, it is understandable why the fee is so high. There is opportunity for you to get an extension on the repayment period, however it will cost you a lot more as the lender might levy higher fee.