Cash Loans

What Is a Fast Cash Loan and How Does It Work?

A fast cash loan is a debt facility offered to consumers which enables them to receive liquid funds into their accounts on an accelerated timeline compared to other retail advances. These types of advances are available online and typically get processed in under an hour, providing the borrower with almost an immediate access to liquidity that they may need during certain times of their life.

All things equal, an instant loan generally has a higher rate of interest than other forms of retail banking money advances provided by financial institutions due to the fact that they are unsecured loans. This means that there is a higher burden of risk on the part of the lender as a default by the borrower does not trigger access to assets that the lender can sell to recoup money. For example, mortgage rates are generally lower than fast cash loan rates because a defaulted payment can lead to foreclosure on the home wherein the lender can reclaim at least a majority of losses.

In terms of the principal amount offered by fast cash loan providers, these types of advances do offer more than the average payday loan (which is also a type of debt that provides near-instant money) but is normally lower in size than other forms of retail loans (e.g. mortgages, auto advances). This is largely attributable to the relatively limited requirements needed on the part of borrowers to get an instant loan. In Canada, principal amounts offered by providers tend to range between $500 to an upper limit of ~$10,000.

The money advances are structured to be paid back in installments wherein the lump sum is funded right after approval and paid back over time. This payback period can be anywhere from a few months to a few years (typically under 5 years).

To learn more about personal money advances we recommend checking out this resource from the Canadian Government.

What the numbers say…

By demographical trends, the greatest growth in non-mortgage credit comes from the millennial and Gen Z population as they grapple with increasing costs by way of supporting children, acquiring vehicles, and increasing tuition.

– Source: TransUnion

Who Can and Should Use a Fast Cash Loan?

Although a fast loan is available to any Canadian above 18 years of age with a valid ID, verifiable source of income and an active bank account, their use is contingent on the borrower’s individual financial profile. Typically a fast loan is used to pay for unexpected, immediate expenses, catch up on bills, cover a medical expense, or car repairs. Due to the higher borrowing costs, people with a non-immediate need for cash may not be the optimal target market for such a product.

A typical user of a fast cash loan might exhibit one or both of the following characteristics:

1. Requiring a sizeable sum of immediate cash to cover an unforeseen expense e.g. car repairs, while payday is still a few weeks away.

2. Requiring a sizeable sum of immediate cash to cover an unforeseen expense e.g. hospital expenses, which their savings and next paycheque may not be sufficient to accommodate.

Points of Difference:

As an instrument, the fast cash loan is somewhat of an intermediary between ordinary retail advances and payday loans. As illustrated by the table below, its key features lie somewhere between the other two, which are on opposite ends of the spectrum:

What to Expect When Applying for a Cash Loan in Canada

A cash loan in Canada have become increasingly popular, offering a convenient solution for people seeking extra cash to cover unexpected expenses or bridge financial gaps. With a variety of fund advances available, including payday loans, and bad credit loans, it is essential to understand interest rates, repayment terms, and maximum charges permitted when navigating the Canadian lending landscape.  The following information will help you make an informed decision when applying for a money loan.

Bank Account Requirements for Cash Loans

Most providers in Canada require applicants to have an active bank account. This is because the advance amount is typically transferred directly to the borrower’s bank account via Interac e-transfer after approval. The same account is also used for automatic repayments, making it essential for borrowers to maintain their bank account in good standing throughout the loan term.

Understanding Payday Loans in Canada

Payday loans are short-term, high-interest loans designed to provide instant cash to borrowers until their next paycheck. With an online payday loan application procedure and an instant decision, payday loans can be an attractive option for those in need of quick financial assistance. However, they also come with high-interest rates and fees, which can lead to a cycle of debt if not repaid promptly.

Online Loan Application for Installment Loans and Bad Credit Loans

Payment loans and poor credit loans are alternative options for those who may not qualify for traditional bank loans due to poor credit history. These payday loans allow borrowers to repay the amount in smaller, fixed installments over a predetermined period. The online application form for these loans typically requires basic personal information, income details, and a credit check.

Traditional Banks vs. Alternative Lenders

Traditional banks and credit unions have strict lending criteria, which may not be suitable for individuals with bad credit or those who need instant cash. Alternative lenders, such as internet loan providers, offer more flexibility with their loan application process, providing a credit check loan and instant loan approvals for eligible borrowers. However, these lenders may charge higher interest rates and fees compared to traditional lenders.

Personal Loan Interest Rates and Repayment Terms

Personal loan interest rates in Canada vary depending on factors such as the borrower’s credit report, loan amount, and loan agreement terms. Typically, loans with longer repayment terms have lower interest rates, while short-term loans like payday loans have higher rates. It is essential to review the payday loan agreement carefully and understand the interest rates, fees, and repayment terms before committing.

Provincial Regulations and the Review Process

Canadian provinces have different regulations governing cash loans, including a payday loan, installment loans, and poor credit loans. For example, British Columbia caps payday loan fees at $15 per $100 borrowed, while Manitoba residents pay a maximum allowable cost of $17 per $100. These regulations protect borrowers from predatory lending practices and ensure a fair review process across the lending industry.

Understanding interest rates and repayment terms is crucial when navigating cash loans. By considering the various loan options available, including payday loans, installment loans, and poor credit loans, and comparing traditional banks with alternative lenders, you can make an informed decision that suits your financial needs.

Factors to Consider about Cash Loans

There are also certain features that can pose risks to prospective borrowers:

1. Interest: Depending on the duration that the instant loan is obtained for and the rate charged by the lender, fast cash loans can be an expensive form of financing compared to other short-term loans and/or credit cards.

2. Rinse and Repeat: Often, borrowers find themselves in a cycle of debt wherein each paycheque goes towards the pay-down of existing loans, leaving little for the operating expenses they took out the loan for. The extensions of the loans as a consequence come with strings attached in the form of higher fees added to the original amount.

3. Predatory Practices: Non-sophisticated borrowers may be susceptible to lending practices that are intended to be unfavourable from the borrower’s perspective by exploiting contract loopholes or misleading marketing materials. It is therefore critical for consumers to find registered institutions that are vetted by regulatory authorities.

Cash Loans Frequently Asked Questions

Can I Get an Instant Cash Loan with Bad Credit?

Yes, it is possible to get an instant cash loan with bad credit. Fast cash loans in Canada are often easy to get and companies that offer them usually have a complete application procedure set up online, so that you can receive your loan in less than 24 hours. If you have poor credit history, you can still get a fast cash loan but it may come with a higher interest rates.

What Do I Need to Get a Cash Loan?

Getting a cash loan requires less paperwork than most other types of loans. The base requirements for a cash loan are a government-issued ID, bank statement and proof of income. Any lender will want to check your income and/or credit score to make a risk assessment. Your income and financial situation will determine the terms that they offer you.

How Much Money Can I Borrow with a Fast Cash Loan?

The amount of money you can borrow will depend on a few factors. The most important factors are the lender you go to, and your monthly income. Different lenders have different practices when it comes to fast money loans. The more money you earn, the more you are able to repay, so the lender would be more comfortable offering you a larger sum. Typically you can obtain a cash loan in the amount of $500 to $5,000 but it can be larger, and different people will qualify for different amounts.

What Loans Are the Best Alternative to Payday Loans?

Payday loans are fast and convenient, but they have several drawbacks. Fortunately, payday loans aren’t the only fast and convenient lending options. For example, personal instalment loans offer much better cost than payday loans, provider larger size loans, and over a longer period of time. Lenders offering instalment personal loans can be just as fast as payday loans, and send you the proceeds in under 24 hours.

Credit cards can also serve as a better alternative to payday loans in many cases. It may be hard to get high credit limits if you have a low credit score. Still, most credit cards come with a cash advance option. You can transfer money from your credit card to a chequing account. Just be aware that doing so carries different terms than using your credit card for a normal purchase.