Fast Cash Personal Loans Gain in Popularity

The short-term loan sector is witnessing an increase in demand. People are turning to fast cash loans to get credit quickly, in spite of the astronomical interest rates set by such loans. These short-term instant loans can be of many forms such as payday loans, cash advance loans, secured and unsecured fast cash personal loans. As the name implies, the emphasis is on speed of loan disbursement. Offered by myriad lending companies, fast cash loans are said to involve relatively less paperwork and minimal loan eligibility rules compared to loans offered by traditional sources such as banks.

It has been said in news reports (Metro, UK Sep 2010) that the number of people taking fast cash loans has jumped four times since 2006. Some experts in the US have seen the boom in fast cash personal loans to be a risky trend for the borrowers.

Fast Cash Personal Loans - Quick and Easy

Short-term cash loans are loans where the loan amount is credited to the borrower's account in minimal time, with minimal formalities involved. These types of loans are also called fast cash personal loans and are usually taken out to meet a sudden cash emergency such as immediate medical expenses, buying a consumer item or funding instant holiday plans.

They are also a resort for people who would otherwise not qualify for a normal loan. Fast cash loans have lower eligibility conditions, less paperwork or application formalities and sometimes no collateral requirements. All that is needed is that the applicant or borrower should have a regular source of income.

Fast cash loans personal loans are also called payday loans, cash advance loans, and fast secured or unsecured personal cash loans. Payday loans are based on the next income amount and date of the borrower. Typically, in a payday loan, the amount borrowed has to be returned with interest on the next date of income. There are also installment options, where the loan installment payment is timed with the payday. The number of instalments is predetermined while taking the loan.

The fast cash loan can be applied online or on the phone. The approval is given more easily than banks, even for fast cash bad credit personal loans. The amount is directly credited into the borrower's account, mostly within a day.

Let's look at the details of various factors, which are involved in a fast cash loan:

• Loan amount - The loan amount in a short-term loan is of a lesser amount than traditional loans, as the repayment period is less. Some lenders offer loans ranging from US $250 to $2500. If there is collateral or security, the loan amount may be higher and of longer term.
• Payment Period or Term - This is the time required to repay the fast cash loan. The loan term is pre-determined. As fast cash loans are short-term loans, the term may be as early as the date of the next paycheck of the borrower as in the case of payday loans. Usually it is a matter of 2 - 4 weeks.
• Installment or lump sum payment mode - Fast cash personal loans can either be paid completely at the next payday or can be made in the form of biweekly payments. The number of payments to be made and the installment amount is agreed before the loan acceptance.
• Interest on loan - The interest amounts in fast cash loans depend on the amount of loan that is approved and duration. The interest amount is expressed in terms of Annual Percentage Rate (APR). For example, some short-term loans may have an APR of 300% while for loans with larger amount, and of longer duration, the APR may be 90%. The actual APR may be much more.
• Late payments and defaults - If the loan amount with interest is not paid within the stipulated time, then the borrower may have to take another loan to repay the amount. There may be additional interest to be paid in case of defaults.

Fast Secured or Unsecured Personal Cash Loans

Short-term cash loans may or may not require collateral for the loan. These types of loans are referred to as fast secured or unsecured personal cash loans. Fast unsecured personal cash loans are granted solely on the basis of the income of the borrower and involve no security or collateral. That's why these types of loans are called unsecured. Payday loans belong to this category. The APR for unsecured fast cash loans may be higher than that of a secured loan.

Secured fast cash loans involve a collateral .The collateral may be an automobile as in the case of auto title loans or auto pawn loans. The security involved may also be stocks. For example, secured fast cash personal loans such as auto title loans involve a fully owned automobile as collateral, which may continue to be used by the borrower till the loan amount and interest is repaid. Some experts commenting on the popularity of fast secured or unsecured personal cash loans have balked at the high APRs involved in such loans.

Fast Cash Bad Credit Personal Loans

A borrower who has a history of bad credit, which is loan payment defaults, late payments or bankruptcy records will find it difficult to get loans from traditional financial sources such as banks and other financial institutions. Lenders providing short-term loans do consider requests for fast cash bad credit personal loans from such borrowers. The APR for borrowers with bad credit may be higher than normal.

Some experts worry about the demand for fast cash personal loans as they feel it would lead the borrowers into a debt trap due to the high APR and increase bad credit. But the people who borrow these types of loans seem oblivious to such concerns, preferring fast cash loans, hoping to repay in shortly. The lenders themselves advise potential borrowers that it is not a solution for serious financial problems.