Disadvantages of an Emergency Cash Loan

An emergency cash loan can be an answered prayer, but securing this type of loan can be problematic. It is a good idea to educate yourself now about the disadvantages the emergency loan provides. 

Disadvantages of an Emergency Loan

  • High interest rates - The typical interest rate for emergency loans range between 10% to 30%. Rates are considerably higher because the risks involved is also high for lenders. The applicant's credit history are not required.
  • Shorter loan terms - Generally, borrowers are required to pay the capital within 30 days from approval. In cases where the recipient cannot pay within the appointed time, the interest rate doubles on the next repayment timetable.
  • Amount restriction - The borrower cannot borrow as much as he or she desires or needs. Additionally, applicants are not allowed to secure funds two times in a row.
  • Collection agency referral - Once the borrower fails to pay the lender, they will refer the client to a collection agency. The collection costs may be charged to the borrower, which means more expenses for the borrower.

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