මුදල් ණය

If you ever find yourself in a situation where you urgently need money and have nowhere else to turn to, know that you are not alone. Most young people nowadays are simply not financially stable and this is not something to be ashamed of as the current economic status of the world is not what it used to be during the times of the previous generations. When you find yourself in these situations, borrowing money is often the fastest and easiest solution to receiving funds, especially if you don’t possess an emergency fund. Technological innovations in the finance sector have not only made this entire process more convenient for customers, but created new ways where customers can receive cash loans.

What is a Cash Loan?

A cash loan is a sum of money borrowed from a third party, generally low in value and to be repaid within a short period of time with interest. Due to the short-term nature, the entire transaction can be completed within just a few weeks or months. Instant cash loans are usually unsecured, which means that the borrower does not need to put up any assets as collateral to borrow the required amount; due to the risk undertaken by the lender, the trade-off for being collateral-free comes in the form of generally higher interest rates.

Some unique features of cash loans are:

1. Comparatively low in value
2. Minimal documentation required
3. Quick approval
4. Short repayment period
5. No collateral required
6. Higher interest

When should I take a cash loan?

Cash Loans are often the most preferable solution when you find yourself needing cash very quickly and the process of obtaining a personal loan simply takes too long, or if you are deemed ineligible to obtain a personal loan. In either scenario, it is strongly recommended that the reason for taking out a line of credit is a very valid reason and not a frivolous one. This is also a good option if you are reluctant to trouble your friends and family by asking them to lend you cash, and it also allows you to keep your private affairs discreet.

Reasons for taking a cash loan

There are many reasons for you to resort to borrowing money urgently, some of which are given below:

• Critical household repairs that cannot be put off (e.g. roof leaks, electrical issues etc.)
• Unexpected medical emergencies
• Settle overdue utility bills to avoid disconnection
• Urgent purchase just before payday
• Emergency vehicle repair

How to get a cash loan?

Getting an instant cash loan, while extremely easy, requires some research for first-time borrowers. There are countless lenders nowadays offering instant money-lending facilities at various interest rates and repayment methods. Once you have selected your vendor (see below for more details on how to select the best money lender), it’s just a matter of filling in an application form and then submitting the required information and documentation. Nowadays, the entire application submission process takes place online, via a website or a mobile app, for maximum convenience and ease of access. After this, the lender will assess your application and decide your eligibility following a verification phone call; if you are deemed eligible to receive the credit facility, the cash will be credited to your bank account in a very short period of time. It’s as simple as that.

What is required to get an instant cash loan?

Not only is the process of applying for an instant cash loan simple and efficient, most require very minimal documentation requirements.

Most of the time, lenders such as OnCredit just require

1. Borrower to be above 18 or 21 years of age
2. Regular source of income (no need to provide payslips or proof of income)
3. A mobile number registered under your name
4. A photograph of yourself (even a selfie would do) and
5. A photograph of your National Identity Card.

With this information, a staff member of your selected company will verify the details submitted by you via a phone call and then evaluate your eligibility for receiving the money by looking at your credit history. If your credit history is acceptable, your application will most likely be approved, and you will receive the cash within a few hours.

Selecting the Best Money-Lender

There are numerous service providers for instant cash loans available nowadays which makes selecting the best money lender a difficult choice. Lenders include not just banks and other financial institutions, but there are also private and licensed money lending companies (like OnCredit) that offer the same services. Then there are the unlicensed, unregistered private companies and individuals who offer predatory money lending services, known as loan sharks. These parties should be avoided at all costs as they charge ad-hoc interest rates and resort to unethical collection practices.

Some of the criteria you need to look at when selecting a money lender are as follows:

• Licensed - all legitimate lenders must be licensed with the Central Bank of Sri Lanka; avoid any lender who is not.
• Registered - all legitimate lenders must be incorporated as a company; avoid dealing with private individuals.
• Testimonials - check their social media mentions and ask around for customer reviews; keep in mind that it’s mostly unhappy customers who leave online reviews so try and find people you know in real life who have dealt with them.
• Terms and Conditions - check whether the lender has clearly listed out all the terms and conditions of their services; avoid any lender who does not ask you to agree to terms that you read before you sign.
• Response Rate - check how good their customer service is; avoid any lender that is hard to reach as otherwise, during an emergency, you will be helpless.
• Interest Rates - it goes without saying, try and select the best lender who also offers a low interest rate
• Convenience and Flexibility - check how easy it is to make payments, get information from them and how flexible they are in terms of adjusting the terms should you find yourself needing some leeway during the repayment period

Instant Cash vs Personal Loans

How can I improve my chances of getting approved?

Most of the time, money lenders look at your credit history in order to evaluate whether you can be trusted to pay back the borrowed amount in full and on time. If you have a bad credit history, you might either be rejected entirely or be approved but for a lower amount to start off with. But worry not, there are several ways of strengthening your credit score. 

• Take many smaller loans and pay each back perfectly on time; this proves to the lender that you can be trusted and you can work your way up to larger amounts of money
• Cancel any other outstanding lines of credit, such as credit cards.
• Get a copy of your credit report and try to settle off any pending payments that you are able to
• If you have any overdue payments, try and make regular minimum payments for each rather than leaving everything untouched
• Try to utilise only 30% of your total credit limit that you are eligible for.
• 

When should I avoid getting a cash loan?

If you are wondering whether you should get an instant cash loan or not, there are a few things you should look at; if you are trying to borrow cash for any of the following reasons, it is safe to say that a cash loan might not be the best course of action for you.

• If you are trying to borrow money to urgently settle another overdue loan; this is a red flag that you are drowning in debt due to poor personal finance management, and getting into more debt is not the solution, especially in the form of instant cash loans that have shorter repayment periods.
• If you have no immediate way of repaying the borrowed amount; if you are trying to borrow money without any source of regular income or any way of settling your monthly instalments, avoid borrowing altogether. While you might be hoping to find a way of settling the loan in due course or closer to the due date, this is far too great a risk to take.

What happens if I am unable to pay it back?

While this is a situation to be avoided at all costs, if you do find yourself unable to pay back the borrowed amount of money, the first thing you should do is contact your lender and discuss the situation with them. If your lender is flexible enough to work out a more feasible payment plan for you, you might find that you have more options in paying it back over a longer period of time. Service providers like OnCredit are willing to negotiate payment methods in favour of eventual debt settlement rather than distress customers further.

However, if you are completely unable to pay back your instant cash loans, one or more of the following is likely to happen:

1. Interest rates and late payment fees will build up the longer you delay your payments
2. Lender will handover your case to a debt collection agency after a while; these agencies will resort to more aggressive and, at times, unethical methods of money collection
3. Your credit score will get damaged and this will affect your future finances
4. Court summons are the final stage in the process although it is likely that most lenders wish to avoid going down this route, preferring to receive their payment at a later date if possible

Instant cash loans are an ideal solution to many situations where you find yourself financially stuck. While they provide much-needed relief for people who find themselves without any other solution, it is imperative to keep in mind that this should not be considered a regular form of financial relief. If you find yourself taking out instant cash loans on a monthly basis, this is a clear sign that you are heading down a slippery slope towards a vicious debt cycle. One unexpected additional expense could send your fragile financial status into a state of ruin and leave you reeling.