Quick cash loans are rapidly becoming popular among Australian borrowers these days. Ranging from just a $100 to over $4000 AUD loan size, cash loans are sometimes approved without the necessity of a comprehensive credit check.
This means that in the majority of cases, you will be approved for the loan and will be able to access the money straight away. However, some will not be approved for these because of their bad credit history. In the end though, quick cash loans are a great solution for a quick fix.
When you are looking to secure a fast online loan, it is important to understand the disadvantages that may apply. Like most types of secured loans, there will be consequences if you do not have a very good credit score.
Lenders may think that your lack of credit history means you are a risky investment. This may result in a higher interest rate than you would get with another type of lender.
Con: The Fine Print of Quick Cash Loans
You should make sure that you are aware of the risks involved when you are borrowing from an online lending institution. In addition to the risk of rejection, you should also be aware that a lot of these lending institutions are offshore.
Therefore, if you have an issue with paying back the money you take out, then the lender overseas may decide to take legal action against you.
You need to read the terms and conditions carefully so that you know what to do in the event that a lawsuit is filed against you.
Pro: Different Loan Options
In order to find the best interest rates for loans, you will have to ensure that you are comparing apples to apples. This means that you need to make sure that you are comparing the same things. For example, consider at the same time several loans’ interest rates, the amount of time it takes to repay the loan and their repayment dates.
In order to make your comparison more meaningful, you should ensure that you have an income statement to see what your monthly income is.
It is also important to compare the amount that you are being charged for among the quick cash loans. The rates that you are being quoted upon are generally based on the amount that you borrow, and not on the total that you would borrow if you have a better paying job or more money in your bank account, right away.
You should only borrow the amount you can afford to pay back so that you don’t put yourself into a worse financial situation than you are trying to get out of.
To expand your choices and options, take a look at the different kinds of loans that you can avail.
Con: Dependent on Credit Rating
There are some disadvantages of quick cash loans that should come to your awareness.
One disadvantage is that they are only available to people with good credit ratings. Having a low credit score can put you on the lower ground when it comes to getting funding options.
If you happen to have a bad credit rating, you may find it quite difficult to get a funding option from a bank or private lender. You may also find it very difficult to qualify for government programs such as Medicaid or Medicare supplement insurance that are based on your credit score.
The worst case scenario is that you will be charged exorbitant fees, and may even wind up with the need to have your credit rating improved in order to qualify for future funding options.
Here’s a handy guide by Canstar about the meaning and the scale of Australian credit scores.
If you have a bad credit rating, read our article on cash loans for those with poor credit scores.
Pro: Quick Money for Personal Emergencies
One of the major advantages of using this type of personal loan is that they allow you to cover an emergency in your life. These types of emergency loans are perfect for students who need immediate cash during school breaks and other college related expenses. College can be a very stressful time and sometimes it is just not possible to budget a budget.
Another advantage of quick cash loans is that they can take care of unexpected medical emergencies as well. In the event of a car accident or an emergency, such as a broken bone or illness, you will want to be able to get your hands on emergency funding options.
If you co-sign with another person on these loans, the funding options will be much better for both of you. This will give you the most options and hopefully, the least financial stress possible.
Should you want to explore other readings about this topic, here is an article by RateCity on the personal loan statistics of Australians.
You should also take the time to compare the advantages and disadvantages of taking a personal loan versus a credit card loan.