One of the most burning topics in the FinTech and loan providing industry these days is 'Cash Advance loan.' As controversial as it is, it is the most extensively used service by consumers these days, and there seems to be no stopping it.
What is a Cash Advance loan?
Cash Advance Loans are short-term loans with relatively high-interest rates available to consumers. Cash Advance loans are typically based on the income of the consumer/applicant, and they have to provide salary details when applying for one.
Why is it a point of contention?
Cash Advance loans charge borrowers relatively high-interest levels. It does not require any collateral or security. These loans may be considered predatory lending, as they have extremely high interest, and people have a pre-conceived notion that they don't consider a borrower's ability to repay, and have hidden provisions that charge borrowers added fees. As a result, they can create a debt trap for consumers.
Why do people prefer Cash Advance Loans?
Because of very limited options in the market, consumers are left with very little to no alternative, and that is when Cash Advance loans come into action. Cash Advance loans providers do not ask for collateral or security, and the interest rate is exponentially high. The one plus point of a Cash Advance loan is that it can be relied upon during emergencies when all doors seem to be closed. Some of the providers do not even ask for the credit score of the consumer.
Cash Advance Loan is a rising controversy in the industry, and its growth is exponential. As long as there is no uniform regulatory system to keep a check on it, the interest-rate controversy cannot be put an end to.
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