People have depended on loans to tide them over financially for as long as the monetary system was used in economy. In fact, the practice of people getting loans, or credit, or borrowing, has been around way before that. In the first barter economies, the exchange of goods and services also had something akin to credit.
Nowadays, loans can be availed of for a number of reasons:
o To buy a house
o To buy a car
o To pay tuition
o Paying for that unforeseen bill
o Tiding one over after an unexpected illness
o Paying for other such unplanned and accidental expenses that leave us helpless and unprepared.
For the second set of reasons, applying for a fast cash loan is the norm. This type of loan is different from other types of loan because:
o It does not require a good credit rating. In fact, people with bad credit usually turn to a fast cash loan when they need credit. Paying for this promptly is one way of erasing a history of bad credit.
o The transaction process is very quick. A loan can be availed of within seconds, minutes, and at the most a few hours after the application has been submitted.
o Only a small amount is loanable. This amount is usually not bigger than your next paycheck.
o The schedule for payment is very short. Usually, the principal amount loaned plus the interest must be paid in full at the next payday.
Thus, the fast cash loan fulfills a need and serves a niche not available to the traditional types of loans. A regular loan would be for a large amount, payable within a few months, and the borrower would have to undergo a rigorous credit investigation by the credit company. In this method, the credit company will hire 2 credit investigation firms to check the credit rating of a borrower. The credit rating is composed of a score that takes into account a borrowers past history of money management. In this form can be seen payments past due, unpaid loans, and the like. It takes a longer time for a loan application to be approved in this way. A high credit rating will mean a good loan package from the credit company while a low or bad credit rating will mean higher rates or disapproval of the loan application.
Since fast loans do not check for a potential borrower's credit rating, the interest rates are automatically higher than in a traditional type of loan. When a borrower chooses from among the credit companies and among the types of loan available, he must look for details such as the interest rates and the APR or the Annual Percentage Rate of a loan's interest calculated within a year. The general rule is that the lower the APR, the better for the borrower.