Different Types Of Direct Cash Loans Available
5) Repay Or Rollover The Loan
The online loan (car title loan, installment loan or payday loan) is then repaid on the maturity date (the final payment date), at which time the principal (the actual loan amount borrowed) and all the remaining accrued interests are due to be paid.
The due date depends on each agreement, because you may prefer the loan divided in several installments or paying it in one month, or at your payday. Therefore, the due date will depend on the preference of each borrower.
For a car title loan, it will be the date agreed, for installment loans, there is an installment due every month until the loan is paid.
For direct cash loans, the due date is normally agreed in two weeks, or in one month. But also there are borrowers that prefer to split the loan in several months, and that is fine too.
Ensure that your checking account is already provided with sufficient funds at the due date, because when the maturity date of the promissory note arrives, the lender will extract the payment from your account and therefore, the debt will be paid.
If the lender cannot retrieve the payment from your checking account because of lack of funds, the loan becomes delinquent and the lender will rollover the debt to the next month, so you have to pay next month with interest.
If you consider that you cannot pay at the due date or that you may require to extend the loan, the lender can in general convert the payday loan into an installment loan. This applies, in general, to all types of direct cash loans.
With an installment loan the amounts owed are split in three, six, or even twelve months, so it hurts less to the budget.
However, as this extension is likewise subject to interest, you should avoid rolling over and extending too much the loan. As I said before, if you think that you will require to extend the payday loan, better go for an installment loan, as it has lower interest.
Nevertheless, it is always better to take cash advances and direct cash loans only to cover urgent repairs, emergencies, and outstanding bills and not abuse of this financial instrument. Do not take direct cash loans for paying entertainment or holidays because they come with high accrued interests.
Direct cash loans are a very generic category of financial instruments, so we have to disaggregate among several types of these loans so you can understand better which is the one that better suits to your requirements
- Cash advances and payday loans . Payments are due in two weeks to a month.
- Installment loans: They have lower APR than payday loans and can be returned in monthly installments.
- Car title loans: These loans are issued with a registered vehicle as collateral. The vehicle can be used by the borrower as normal.
They are similar in the sense that they are all direct cash loans when the conditions are met, but when we study them in detail, they are quite different. Let?s go into more detail with each type of these financial instruments available.
Payday Loans And Cash Advances Online Are The Most Common Type Of Direct Cash Loans
Payday loans are accessible online and are returned with a portion of your next salary or simply retrieved from the lender from your checking account at the due date.
They are often available for a two-week period up to one month. They can be renewed and extended, what is called a “rollover”. Payday loans often feature high interest rates due to their short duration and lack of good credit scores.