When you need quick cash, there are several different ways to come up with it. However, you need to be aware of how these different borrowing options could affect you and what the requirements are for them as well.
You can use Cash App to borrow money, and the process is simple. This is best only for short-term loans when you need a small amount of money quickly. There is a borrow feature in the banking menu of Cash App to use for this if you qualify.
There are several details to understand before you jump into borrowing from Cash App. It's important to review the terms of the loan and whether or not this is beneficial for you. In this guide, we cover how to go through the borrowing process and when it is or is not a good solution to depend on.
How To Borrow Money From Cash App
Not everyone will be eligible to borrow money from this app. There are certain factors used by the app to determine whether or not you can be an eligible borrower. Those determinants are similar to other borrowing tools.
Cash App allows for a very limited borrowing range. They consider things like your state of residence, your Cash App usage, your credit, and the use of a Cash Card. The loans are not meant for large sums of money or for extended borrowing.
This concept is similar to that of a payday loan but the rates are far more reasonable. If you're trying to choose between the two, we recommend using the Cash App borrowing tool for sure.
The Cash App borrowing features allow a user to borrow up to $200. The funds are then required to be paid back within four weeks. They charge a flat fee percentage based on the amount that you borrow. If you do not get the amount paid back on time, they also charge you a specific interest rate weekly until it is paid.
These rates are relatively low when you consider other short-term borrowing options. Here is a quick overview of the process to borrow.
- Login in to your Cash App.
- Go to the Banking menu by tapping on your balance and then "banking"
- Here, you should see an option for "borrow" if you are eligible.
- Click on "borrow" to proceed.
- Choose your amount to borrow based on your eligibility
- Choose a repayment plan that will work for you
- Review the terms provided and accept the loan.
Funds are made available within 24 hours of approval of the request, making this a quick and convenient way to get a small sum of money when you desperately need it. Just be sure that you can commit to the terms of repayment.
This is a very new feature with Cash App so it is still fairly limited. They are out of the testing phase but have not opened borrowing up to all users. It's possible that they will further expand the capability, but it's also possible that they will do away with it completely at some point.
For now, it's a benefit for someone who needs a quick loan for a small loan and can pay it back within a few weeks.
Is Cash App Safe To Use?
Cash App works much like other secure money apps. You can compare the security to apps like PayPal or Venmo that are frequently used for cash handling. Because of the nature of the app, it's essential to understand the security and whether or not your information will be safe.
After all, you're dealing with your finances and your personal information. You certainly don't want to have to worry about someone stealing your data or getting ahold of your money and wiping you out.
They have several integrated features that allow you to rest assured that your money and your information are safe.
First of all, you will be required to have a unique ID and password. In addition to this, they set up another parameter for access. This includes the use of a personal pin to enter the app. You can set up touch ID, a special passcode, or facial recognition rather than a pin.
This particular safety feature protects your app access even in the event that someone else happens to get ahold of your phone and tries to access the app. Whether you lose the phone or someone, you thought you could trust tries to access it.
Cash App allows you to adjust your notifications with several different options for security purposes. You can request to receive alerts when there is any sort of unusual activity. These alerts can be app alerts, email alerts, and/or text alerts.
Thirdly, if you use the Cash App card, you have the ability to disable it directly in your app. This means if you accidentally leave your card somewhere or it gets lost or stolen, you can shut it down and protect yourself from card usage without your permission.
With these details, you can rest assured that your access and your funds are secured within the app. Since the borrowing feature is so new, it's unclear whether there are additional safety elements for protection. However, with these security features, even borrowing should be safe.
In terms of safety, if you have ever been concerned that Cash App was a scam, rest assured that it is very real and in line with required financial and personal security features.
Cash App Borrowing And Loan Details
There are plenty of lending opportunities out there. Many companies offer long-term loans for larger amounts. They also have quick approval or denial returns, so you know right away whether you can qualify.
The difference between Cash App and lenders like Lending Club or Opportun is the interest rates, amount capabilities, and overall terms of the loan.
For example, at this time, Cash App limits your borrowing capability to $200. It is specifically designed to be a short-term cash loan. The interest rate is reasonable, and they simply charge you a flat 5% fee on the amount that you borrow. Additional interest is only added if you exceed the grace period for repayment.
However, other online lenders are typically designed for larger amounts of cash and have more robust repayment terms to include long-term repayment over the course of up to 5 years. These lenders will charge you an initial origination fee for the loan as well as an ongoing interest rate on the principal.
The big difference is their origination fee might be similar to the 5% that Cash App charges but their standard interest rates can be as high as 40% in some cases.
To break it down, Cash Apps loans are 4 weeks or less for amounts of $200 or less. They charge an immediate origination fee of 5% and 1.25% for any loans that exceed their initial grace period for repayment.
This is designed for small amounts of money that can be repaid quickly. Maybe your utility bill is due on Tuesday but you get paid on Friday. This could be a solution for that type of circumstance.
Why Can't I Borrow Money From Cash App?
The borrowing feature on Cash App is still in a new phase. They have not made the function available to all clients. These are the initial requirements to qualify.
- Your state allows the feature under regulations
- You have existing Cash App history
- You have a positive credit history
- You've activated and used a Cash Card
These details are broad so just know that not everyone has the ability to borrow. This could be based on your history with Cash App or your credit history. However, it might also be based on the state that you live in. It's not always personal when you don't have the borrowing feature available to you.
Should I Borrow Money From Cash App?
If you have borrowing available to you, this is a good way to borrow with short-term expectations. The critical aspects are to remember this is designed to be a short-term loan, and you need to be able to pay it back quickly to avoid the accumulation of interest.
The interest rate is low, but it can add up quickly if you are not careful since it is applied on a weekly basis. If you're looking for quick cash and know that you will pay it back within a few weeks, this could be a feasible solution.
Always take note of the loan terms and assess your ability to repay.
Cash App added the borrowing feature in 2020 for testing purposes. Just recently, they have expanded the service based on specific criteria. However, the feature is not necessarily available to every Cash App participant.
The Cash App loan can be useful for small amounts of cash to be repaid quickly. It's meant to be very short in turnaround but can provide a solution when you need something to tide you over for a bit.
Shawn Manaher is a former financial advisor, has founded 5 online businesses, and is a coach, speaker, podcast host, and author. He's been featured on Forbes, The Consults Corner on TAE Radio, The Writing Biz, What's Your Story, and more.