To understand what exactly the term Cash Advance APR stands for, you will have to first understand what a Cash advance is individually, as well as what an APR is.
Cash Advance: According to one of the most trusted sites when it comes to definitions, “a cash advance is a short-term loan from a bank or an alternative lender”. That means, that the loans that are offered for a shorter period of time that include lower amounts as compared to long-term loans. These advances are meant to support you through your day to day activities such as buying groceries and essential items, catering to emergencies or repairing a broken vehicle. Unlike long term loans, cash advances aren’t really meant for one to invest in something that’s for the longer run and are instead meant to give you just some sort of financial assistance in your times of need.
Cash advances can be availed from direct lenders or traditional ones and you can go forward with whichever one seems best to you depending on your preference, because after all “to each their own”.
Direct lenders claim to fund you with cash advances within just a day, which is true in the case of genuine ones. A cash advance from a direct lender does not demand conducting a credit check or asking for collaterals and if you choose to apply for one with a lender online, that will certainly be even faster; reason being that you will not have to take out the time in order to travel all the way when you want to apply for a loan, since such lenders are accessible 24×7 on the internet.
Traditional lenders however, can take up to days to transfer your loan to you, since they have lengthy approval procedures involving credit checks, paperwork and collateral; giving lesser flexibility to consumers as well as restricting their options to a certain sector of people, who majorly have good credit ratings.
APR- An APR that expands as Annual Percentage Rate “refers to the annual rate of interest charged to borrowers and paid to investors” as defined by Investopedia. You will be charged depending on the number of days you take a loan for. There is no strict rule about how much an APR for a particular loan is supposed to be, throughout a state or country, which means that the lender has quite a lot of flexibility when it comes to deciding the APR he wants to offer, which is why rates differ from lender to lender.
What Makes APR more transparent?
The industry standard of the lending system over years, had become Compound Interest. This was largely so, until spotlights started pointing at them, revealing how a seemingly small interest percentage, over time and after repeated compounding, can result in a very heavy “Effective Interest Rate”. People who are not well versed with all these terms, are bound to fall prey of estimating a compound interest figure to be much less expensive than it actually is.
The complication of calculating a compound interest’s final effect on a borrowed amount is further complicated by the “compounding time”. Some calculations can incorporate annual compound interests while some can be compounded semi-annually, quarterly or even monthly. While the understanding of each of these terms can be sought from various online resources, it is fair for us to summarize that these complicated calculations are avoided by the transparent simple interest which comes in the form of APR. APR is easy to calculate and the same percentage of interest in APR will result to a much smaller amount of interest payable than that what a compound interest would accrue. This is a reason why recent regulations are increasingly tending to mandate the use of APR.
Cash Advance APRs: APRs of cash advances given by lenders are, as you may have figured by now, the interest imposed on short-term loans given by traditional or direct lenders. When it comes to choosing whom you want to borrow money from, you should take into consideration the other factors such as time, travel, accessibility, credit checks, collaterals, etc.
For example, if you have a decent credit score and enough time to spare, going forward with a traditional lender isn’t a bad idea at all. However, a bad credit score or the dire need of some extra cash suggests that you choose a direct lender instead.
At CashUSAToday, our APRs on our cash advances are transparent and affordable as you may notice once you visit our rates page.