If you are currently facing a difficult money situation and need quick help, you might be considering the option of a merchant cash advance. If so, the following article will help educate you as a consumer, and enable you to make a smart decision.
If you are considering a business loan, then you need to be sure that you have the means to repay it on time. Loans such as these carry sky-high interest rates, and if you fall behind in the payments, additional high costs will be incurred.
One of the drawbacks to taking out a merchant cash advance is that it is likely that paying it back will use all of your next paycheck. Your loan will have to last until the paycheck after next, since you will have to use your next check to repay the loan. Not considering this before you take out a merchant cash advance can be detrimental to your future funds.
Call around and find out interest rates and fees. Most merchant cash advance companies have similar fees and interest rates, but not all. You may be able to save ten or twenty dollars on your loan if one company offers a lower interest rate. If you often get these loans, the savings will add up.
Beware of falling into a trap with business cash advances. In theory, you would pay the loan back in one to two weeks, then move on with your life. In reality, however, many people cannot afford to pay off the loan, and the balance keeps rolling over to their next paycheck, accumulating huge amounts of interest through the process. In this case, some people get into the position where they can never afford to pay off the loan.
Realize that you are giving the merchant cash advance access to your personal banking information. That is great when you see the loan deposit! However, they will also be making withdrawals from your account. Make sure you feel comfortable with a company having that kind of access to your bank account. Know to expect that they will use that access.
If you have any valuable items, you may want business financing to consider taking them with you to a merchant cash advance provider. Sometimes, merchant cash advance providers will let you secure a merchant cash advance against a valuable item, such as a piece of fine jewelry. A secured merchant cash advance will usually have a lower interest rate, than an unsecured loan.
Business cash advance loans are only for emergency situations. These loans are able to make you feel trapped and it’s hard to get rid of them later on. The amount you get will be less than you’ve earned, and you’ll be in dire straights yet again.
Avoid taking out a merchant cash advance unless it is really an emergency. The amount that you pay in interest is very large on these types of loans, so it is not worth it if you are getting one for an everyday reason. Get a bank loan if it is something that can wait for a while.
Check with the BBB before taking a loan out with a certain company. While many of the merchant lending companies are ethical, some of them may not be trustworthy. If the company has had complaints lodged against it, see how the company responded.
You should now be fully informed about merchant advances and how they might be able to help you out of your monetary woes quickly. Knowing all of your options, especially if they are limited, will help you to make the right choices to get you out of your bind and onto better financial ground.