What is a Fast Cash Loan?

Sheri Cyprus

A fast cash loan is the short-term lending of a fairly small amount of money by a payday loan company. Payday loan companies make their profit by charging borrowers a high interest rate such as 15 - 30 percent and adding late fees or other charges onto cash not paid back by the payment date. In order to qualify for a fast cash loan, the company requires the borrower's proof of employment such as a paycheck stub with the employer's name, address and phone number. The borrower then writes the payday loan company a check for the amount borrowed before receiving the cash. Fast cash payday loans are controversial and even illegal in some states, because of the high interest charges the companies offering the loans charge borrowers.

Proof of employment is required for obtaining a fast cash loan.
Proof of employment is required for obtaining a fast cash loan.

Payday loan companies require borrowers to sign a contract and it's important for a borrower wanting a fast cash loan to read all contracts carefully. Borrowers shouldn't sign the contract to go ahead with the loan if they find the terms difficult to accept. Fast cash loans are prohibited in at least 10 states and the District of Columbia. These are all Eastern and are: Georgia, North Carolina, New York, New Jersey, Pennsylvania, West Virginia, Maine, Maryland, Connecticut, Massachusetts and Washington, D.C.

Payday loan companies offer fast cash loans.
Payday loan companies offer fast cash loans.

Fast cash loans are also called quick cash advances as they serve as money paid in advance of an employment paycheck. A fast cash loan can seem like the ideal solution when money is urgently needed before payday and it's true that this type of short-term loan may help a person out of a financial bind of a few hundred dollars. However, the cost is high because of the interest rates, as well as the risk that getting these loans may become habitual and financially draining. For example, if a worker borrows $200 US Dollars (USD) in a fast cash loan, it could cost him or her a $60 fee. While that alone wouldn't necessarily lead to poor financial health, losing that much money several times is nearly equal to the amount first borrowed.

It may be difficult to catch up with other expenses after an advance fast cash loan since, continuing the above example, the paycheck is short $60. Being low on cash again before the next payday may lead the person into a cycle of relying on fast cash payday loans. The financial situation can easily become worse if the borrower can't pay back a loan in time — a payday loan company will add a late charge onto the cash owing.

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