Cash loans are short term non-secured loans with 15-day or 2-week maturities. They are loans made out against the net proceeds of your payday and are meant to be settled on your next payday.
About the only time they become long term cash loans is when they are rolled over either as another cash loan. This often happens when borrowers cannot meet their promise to settle the loan on their next payday.
You could advice your payday lender before maturity date that you could not meet you forthcoming maturity date and pay off only a fraction of the due amount. Depending on the terms and conditions of your cash loan, the lender can simply rollover the balance of the loan, or offer a new loan to pay off the old.
Here are examples of getting long term cash loans. Under any of them, you are basically buying time to allow you to completely settle the principal amount owned.
- If you are expected to settle $1,000 on your payday plus a $200 interest (10%), but can only afford a fraction, say, $300, you can just pay off the $200 interest and apply a payment of $100 on the $1,000 principal amount which leaves an $900 balance you can rollover. On your next payday, which is the 30th day, you are expected to pay $900 plus $180 in interest charges, so on and so forth.
- Your lender can opt to extend another $1,000 cash loan to pay off the balance of the old loan and accept the $200 as interest payment. You won’t get any loan proceed but be prepared to pay $1,200 on the next payday.
Under either situation, be prepared to pay additional processing charges or loan renewal fees for extending your cash loan into a long term cash loan. It’s also possible that the lender can revise the interest rate upwards as a penalty.
Bear in mind that cash loans are designed to be a short term bridge financing and is designed to be the best solution for getting fast and convenient cash relief that you won’t get from any other kind of loan products.
Sure enough, the interest ranging from $10 to $30 for every $100 loan proceeds is high, but that’s the price you pay for getting instant cash as the lender uses this high APR to cover his cash exposure.
The equivalent to this is your credit card cash advances which automatically rolls over as a long term cash loan if you don’t pay the credit card statement in full in 30 days. But if you have maxed out your credit card or if the cash advance won’t be sufficient to cover you urgent need, a cash loan is your next best solution.
You could opt to get a lower interest personal or car loan with typical APRs less than 20% p.a. But be prepared to transact with a bank and wait out a few days or even weeks to get the loan processed and released.
Depending on the situation, be careful when extending a loan into a long term cash loan. If you can pay off even half the principal, at least you’d have a smaller balance to pay next time.
