The first time you borrow money can be overwhelming. It only gets worse if your credit isn’t great, and you can’t qualify for everything you see online.
With your credit limiting what you can borrow, a cash advance promises a simple experience. But there are plenty of cash advance loans online, from payday cash advances to installment loans and lines of credit.
If you’ve never used any of these financial products before, you may have no frame of reference for what’s appropriate. New to the whole experience, you can easily make a mistake that practiced borrowers know how to avoid.
Check out this advice to help you borrow like a pro.
1. Understand What APR Stands For
APR, or annual percentage rate, tells you how expensive your loan is for the year. It’s an essential number to know, even if you plan on paying back your cash advance in less time. Lenders cram the interest rate, origination fees, and any other charge that applies to your account under APR, giving you a more comprehensive cost of borrowing than interest on its own.
Get a feel for what APR is high and low. Generally speaking, you’ll only unlock low APRs if you have stellar credit.
Sometimes, borrowing at higher costs is unavoidable. If you damaged your credit during the pandemic, financial institutions might raise their prices the next time you try to borrow money.
2. Get to Know Your Borrowing Profile
Your credit score is a big indicator of the APR you might one day pay if you’re approved for a cash advance online. However, your credit isn’t the only way online loans direct lenders assess your eligibility — some don’t even use risk-based pricing.
You may also have to submit your income and employment information, assets, and current debts before a lender is willing to give you an advance.
Once you know the type of profile you have, you can find a cash advance direct lender more willing to work with borrowers like you.
3. Establish Your Goals
Before you go any further, you’ll want to get to the bottom of why you’re borrowing. Here are some questions that you should answer:
- How much money do you need?
- How quickly can you repay your loan?
4. Sit Down with Your Budget
The answers might be hard to find if you don’t already have a good grasp on your budget. If it’s been a while since you last updated your budget, it’s time to sit down with your finances and refresh it. This spending plan reveals whether you have enough cash on hand to make a cash advance lender’s advertised payment.
Don’t panic if things would be tight. You can put your spending on a diet to slim down on expenses, freeing up more cash to go towards your payments.
Look to discretionary spending for inspiration. These make up the frills that pad out your budget, so they’re easier to postpone until you pay off your cash advance. They might include takeout, online shopping, subscription fees, and rec sports leagues.
5. Shop Around
If you don’t like what you see on one cash advance lender’s site, move on to the next. Comparison shopping is an important part of the borrowing experience, and it’s a good way to find the best possible deal for your profile.
Got the first-time jitters? Follow these steps to simplify your borrowing experience. They’ll help you find an advance like a pro.