Sometimes you need a small amount of cash quickly, but taking out a loan from the bank is a lengthy process.
Lucky for you, with the rise of online banking came some excellent modern options that are extremely easy to use.
One of them is Cash App and their new feature, Cash App Borrow, is currently being tested.
We’re here to let you know more about it. In this article, we’ll explain:
- What is Cash App?
- Who can and can’t borrow money from Cash App?
- Why should you take out a Cash App loan?
- Is Cash App safe?
- How does the Cash App Borrow feature work?
- How to borrow money from Cash App.
- What’s the difference between bank loans and the Cash App Borrow feature?
- What are the alternatives?
- How to borrow money from yourself with Infinite Banking.
Hopefully, this article will answer all of your questions and help you decide whether the Cash App Borrow feature is good for you.
What is Cash App?
To put it shortly, Cash App is an online banking app that lets you simply perform some central financial processes.
According to research, about 65% of Americans will switch to online banking in 2022. This new development comes with the modernization of financial trends.
Founded in 2013, with the original name Square Cash, this company managed to gross about $385 million in 2020. It was co-founded by Jack Dorsey, the current CEO of Twitter.
This app lets you send money with direct deposits, get cash boosts, cash bonuses, use a cash card if you want to, invest, and do many other things.
Most recently, Cash App became one of the online banking apps that offer loans.
Can you borrow money from Cash App?
Making the Cash App loan feature is a big task, so it’s put into official use just yet.
According to data, only 15% of online banking users inquire about a financial product via apps, which is relatively new.
In other words, Cash App will let you borrow money, but only if you’re one of the few accounts in the US and Canada that are currently allowed to tet the option. So, if you’re one of the lucky few, you can utilize this feature. That being said, it’s assumed that this option will officially be available to everyone pretty soon.
Nevertheless, as you’ll see later in the article, some restrictions apply.
Can anyone borrow money from Cash App?
Not everyone who uses Cash App will get the Borrow feature. Also, there are always rules that apply to make the company sure you can pay back the debt.
When it comes to the current situation, as mentioned before, only a small number of people are testing out the feature.
Why can’t someone apply for a Cash App Borrow?
Even though we don’t exactly know all of the rules that will be applied in this feature’s future, there are a couple of reasons why you might not be able to take out a Cash App loan.
If you already have a negative Cash App balance, you’ll need to pay it back first before borrowing more. This way the company protects both you and themself.
As with most banks, if you have a bad credit score, the company you’re getting money from likely won’t trust that you’ll pay it back once they run a credit check. This can also happen if you use a debit card and have no credit score.
If your account on Cash App isn’t verified, you could get rejected for your Cash App loan. Check your settings.
Update your app
This is probably the simplest solution, but if you can’t use the Borrow feature to get money from Cash App or don’t seem to have the option available to you yet, you should check if the app needs updating.
Terms of service violation
Last but not least, if Cash App decides that you violated their Terms of Service in the past, you likely won’t be able to take out a loan.
Why should you borrow money from Cash App?
Even though a Cash App Borrow sounds similar to short-term loans, there are some crucial differences.
Most importantly, borrowing from Cash App is better because you have to pay off your old debt before committing to a new one, while a bunch of short-term loans can add up in interest rates.
Borrowing from Cash App is also better than using your credit card, although only if you need up to $200.
That being said, you should always think about the long-term effects borrowing money could have.
Is Cash App safe?
Cash App is an entirely secure platform to use for online financial purposes.
Your personal information is kept safe with the help of encryption, security lock on your phone, PIN entry, touch ID, coin storage, fraud protection, push notifications and the option to disable your card at any time.
How does a Cash App loan work?
Cash App Borrow is a good way to get fast cash. You just need to borrow money and follow the rules.
Here’s what you should know about how this feature works.
How long does it take to get approved?
This depends on your bank and whether you’re entirely eligible for the Cash App loan feature, but it should only take about a minute to get approved.
Additionally, you’ll receive money on your account in a matter of minutes.
How much money can you borrow from Cash App?
Cash App Borrow feature isn’t an adequate long-term solution for financial problems. Cash App only lets you borrow from $20 to $200, so it isn’t a good option for more considerable expenditures.
Additionally, the amount you can borrow depends on the funds you deposit into your account. For example, if you deposit $300 monthly, you can borrow up to $70.
However, if you regularly deposit at least $1,000, you can get the maximum amount of $200.
There are currently no exceptions to that rule, so we suggest contacting your bank if you need more than $200.
Paying back the loan & interest rates
Once you borrow from Cash App, you have four weeks to pay back the personal loans, which is sufficient time for these sums. After these four weeks, you’ll get an additional one-week grace period during which interest won’t be changed.
Cash App has a flat annual percentage rate (APR) of 5% on the borrowed amount regarding rates. After the one-week grace period, you’ll get an extra 1.25% non-compounding in addition to what you owe them weekly.
This may not seem like much and it’s lower than credit card APRs, but it can quickly add up if you’re not careful.
You can make your loan payments every two weeks, on the 16th and 30th of each month. You can also make a direct deposit in person in stores that sell prepaid cards with your cash card, set automatic payment or pay on the Cash App website.
Affecting your credit score
As mentioned before, your credit score is crucial anytime you want to take out a loan. If your credit score is terrible, any credible institution likely won’t approve it.
As long as your credit score is alright with CashApp, you can borrow money from them.
However, keep in mind that borrowing money can and will affect your credit score. Before applying for loans, make sure to pay them back on time to improve your credit score. Loans can have a more significant long-term impact than you might expect. Make sure you only borrow money when you need to.
Next, let’s see how to borrow money from Cash App.
How to use the Cash App Borrow feature
If you’re wondering how to borrow money from Cash App, we’re here to help. You need to take a couple of steps to make sure you’re eligible for this option and successfully borrow from Cash App.
Here’s what you need to do.
- Open Cash App
- Tap on the Cash App balance tab at the lower left
- Tap on the “Banking” option
- Tap on the “Borrow” option if you have it available
- Tap “Unlock,” after which Cash App will let you know how much you can borrow
- Choose the amount you want to borrow and accept the loan agreement.
As mentioned before, getting money from Cash App, including getting the funds deposited into your account, will take only about a couple of minutes. The way that this feature works is simple.
Bank loan vs. Cash App loan
Sometimes taking out a short-term loan from your bank or a payday loan is a better option than borrowing from Cash App. For example, you might need more than $200 or you’re not eligible for the Cash App loan.
There are a couple of significant differences between these two, so we’ll get into them now.
Firstly, and most importantly, the financial viability of your money is different when you take out a loan from the bank and when you borrow from Cash App.
Your bank will likely have a more stringent process and stricter rules when determining whether you’re eligible for taking out a loan from them. They’ll assess your entire income and other financial information and give you the offer based on that.
Additionally, they’ll create a payment plan for you. This way, they’ll ensure that you know exactly when the payment is due, which is significant and helpful for you and them.
As mentioned before, when explaining how to borrow money from Cash App, they won’t inspect your earning, spending habits or bank account before they decide to approve your loan. However, they will look at your deposit amount on the app and your current credit score.
Your credit score serves as suitable proof to companies about whether you can be expected to pay back your loan or not. So make sure that your credit score is high enough and that you can pay back the loan on time to avoid further ruining it.
Additionally, you’ll need regular deposits to your account before they let you take out a loan from them.
In summary, getting a loan from Cash App is speedy cash compared to getting a loan from a bank, although some restrictions apply. Remember that borrowing money isn’t something you should do regularly.
Alternatives to Cash App loans
Not everyone is eligible for Cash App Borrow, even if they have a Cash App account. Also, some people may need more than just $200. Thankfully, there’s a lot of good alternatives, online lenders and loan apps to Cash App Borrow, some of which we listed here. Some of them provide cheaper loans and interest in the long term.
If you aren’t eligible for the Cash App to borrow feature, you should check some other payday loans online where you don’t need a credit check. Other less affordable options include credit cards, banks, peer-to-peer lending, crypto lending or other online lending options like Rise credit and Moneylion app.
As with all of the loans that don’t check your credit or let you take out a loan even with a bad credit score, you need to make sure you know the APR is right for you. High rates can put you into more debt, even when it’s a flat fee that sounds good.
Oportun is a loan company that gives you an affordable alternative to payday loans. If you have no credit history or bad credit, this company will let you borrow from $300 to $10,000, which you can pay back in up to 48 months.
They recently began capping interest to 36%, making them the most affordable alternative. They also give you payment plans and support multiple payment options.
With CashNetUSA, you can borrow up to $100 to $3,000 in no time. It’s a good alternative to Cash App for its speed and availability. It’s a good place to borrow money online with relatively appropriate interest.
OppLoans is another company that lets you borrow money even with bad credit, as they won’t even check your credit. You can borrow from $500 to $4,000, with two years for repayment.
Although it seems like a lot of time is a good option, check for APRs and interest. OppLoans will charge you up to 199% flat fee on the amount you borrow.
Borrow from yourself
Borrowing money with payday loans and credit cards is sometimes the only solution to financial issues. It’s still not an ideal situation. But what if we told you that you could borrow money from yourself?
We’re here to teach you about the concept of Infinite Banking. Here is some of the crucial information you should know about it.
The only thing you need for this process is a Whole Life insurance policy.
Here’s how it works. Infinite Banking is a strategic method for utilizing your life insurance to create an endless banking system. To put it in other words, Infinite Banking means being your own banker, just without the high fees and interests that aren’t good for you.
When you own an overfunded life insurance policy, you can borrow money from yourself using your policy’s cash value and repay it later. When you borrow money from yourself and pay it back with the set rate of return, you’re becoming your own bank.
Infinite Banking involves:
- Overfunding (with after-tax funds) a high cash value life insurance policy from a life insurance company.
- Accumulation of Cash Value (tax-free) throughout the years you are a policyholder of your life insurance policy.
- Tax-Free Loans taken out against your life insurance policy’s cash value to use for your financial expenses.
All of these culminate to create your bank. Even when you take out a loan and spend that money elsewhere, your Whole Life insurance policy still earns dividends.
Infinite Banking is an excellent step to take if you want to reach your financial goals, control your finances and build wealth using the life insurance policy.
Getting a Cash App loan is a helpful way to get some money quickly, but it does have downsides. You might not be eligible for the option or you need more than just up to $200. However, if you fit the criteria and need some cash, it’s an excellent step to take.
We hope that this guide helped you determine whether this option is proper for you or not! We also hope that it made you interested in the concept of Infinite Banking with Whole Life insurance.