Cash App’s Loan Feature: Here’s What You Need To Know
Cash App is Square’s peer-to-peer payment service designed to make sending or receiving money simple. It’s evolving into a full-fledged financial tool. Besides transferring money back and forth, you can receive your paycheck via direct deposit to your account, set up bill pay, and use the Cash Card to pay for goods wherever Visa is accepted. And soon, you may be able to use the platform to get a loan — Square is testing Cash App short-term loans on a small cross section of users.
If there are times when you need an advance before you get your paycheck, some Cash App loan money could be a lifesaver. But is the fast, convenient form of borrowing a good idea? Read on to find out what you should keep in mind when considering online and mobile lending options.
Does Cash App Let You Borrow Money?
Cash App makes sending and receiving money fast and error-free. All you need is a unique $cashtag, or you can scan the QR code through the app. Having access to a Cash App loan would make it possible to borrow money when you’re in a pinch.
If you need a fast loan, can Cash App send $2,500? Not yet. The concept is still under testing and is limited to loans of $20 to $200.
According to TechCrunch, loans fund quickly and require you to pay them back in four weeks or less. But carrying a balance so long can add up. As of August, during early testing, Cash App charged a 5% flat fee to borrow, plus another 1.25% per week after the grace period.
How Do I Get a Cash App Loan?
Cash App loans are designed to make borrowing money hassle-free. After all, the last thing you want to deal with if an emergency pops up is a long, complicated borrowing process. The Cash App loan application process hasn’t been revealed yet, but it’s likely you would be able to get funded through the mobile app with minimal effort.
Is Cash App Safe?
It’s too soon to analyze how safe a Cash App loan application is, but the Cash App platform itself is secure. Cash App ensures your money and personal information are safeguarded in a few ways:
- The app integrates with your smartphone’s screen lock, where PIN entry, Touch ID, passcode or facial recognition add an extra layer of protection if your phone is lost or stolen.
- You can disable your Cash App card if you’ve misplaced it or for extra security.
- You can set up email, text or push notifications to help you monitor your activity and warn you of unusual account usage.
What Other Ways Can You Borrow Money Online?
Having access to fast cash can make all the difference when you need money. Most people turn to the funds in an emergency savings account, borrow from loved ones or charge the expense to their credit card.
Fast-cash loans have their drawbacks, such as getting you into personal or credit card debt or charging high fees. While Square tests the functionality of Cash App loans, consider the following alternative lending options to get the money you need quickly.
Oportun provides an “affordable alternative to payday loans” and may be best suited for borrowers with no credit history or bad credit. You can borrow between $300 and $10,000 for up to 46 months. Oportun recently began capping loans to a maximum of 36% interest to back up its assertion of affordable loans.
You can borrow between $1,000 and $40,000 through LendingClub. Once you establish a track record with LendingClub, you may be able to borrow two loans at a time, which could be a useful way to fund your shortfalls with different payback periods and repayment amounts.
LendingClub charges a 2%-6% origination fee for each loan. You’ll have up to five years to repay the loan in full, but don’t take too long — you’ll pay an annual percentage rate of 10.68% to 35.89%.
OppLoans is another loan company specializing in bad credit loans, offering no credit check and amounts of $500 to $4,000. OppLoans has terms of up to two years for repayment — ideal if you need more time to pay down the debt.
Although having the option to pay back the loan over a longer period of time takes some of the pressure off, caution should be exercised. OppLoans can charge an APR of up to 199% on the amount you borrow.
Keep in Mind
As with all bad-credit or no-credit-score loans, it’s important to watch the APR. Otherwise, you could end up paying far more in interest than the original amount you borrowed.
Are Online and Mobile Loans Like a Cash App Loan a Good Idea?
When considering one of the online lending options, evaluate the cost of borrowing money as well as the lender’s terms for repayment. Most online lenders claim they’ll provide cheaper loans than a payday loan, but the loans are still pretty expensive if you don’t pay the balance off quickly. Be sure to fully understand what you’re signing up for and whether you can really afford to borrow.
Rates and fees are subject to change.