Many times in life, you may feel stretched for cash. A cash back loan can put some cash in your hand in dire need. In this article, you will get to know everything there is to know about cashback loans.
What Is a Cashback Loan?
As the name suggests, the cashback loan rewards you for taking a loan and repaying it on time. The idea of a cashback loan is to entice the person to make the loan offer. The rewards on loan and successful repayment depend on the lender.
Many lenders offer payday loans as cashback loans. The cashback aspect lures the person to take a payday loan. The borrower is happy because the lender is offering a cashback that becomes your cash savings.
What Are the Rewards Offered?
As mentioned earlier, the decision about rewards entirely rests with the lender. Some lenders offer $1 to $5 for every $100 borrowed. If the cashback loan amount is $1000 and the reward amount is $2, you would 10 x 2 = $20 as cashback.
The cashback is given after you have successfully repaid the loan as agreed. The cash is deposited in your bank account by the lender after the successful repayment of the loan.
Some lenders also pay a cashback reward when you refer a friend, and he/she takes a loan from the lender. In this case, there is no condition of repayment to earn the cash reward. The cashback is awarded as soon as your friend or the referred person signs the loan agreement.
Different Ways to Use the Cashback Earned
Some lenders allow you to add the cash value to your next loan. A few lenders also allow applying the cash value of the cashback to your existing loan. This helps reduce the payment of your cash back loan.
How Much Can You Earn Through These Loans?
If you have a habit of making small loans to meet your financial needs, cashback loans can ensure good rewards if you stick to one lender. Some lenders offer higher cashback for taking multiple loans from them. For example, they might offer $10 for the first $1000 loan. The cashback reward could increase to $20 for the 2nd loan, $30 for the 3rd loan, and $50 for the 5th loan.
What Are the Interest Rates Offered?
These loans are not particular loans. Hence, don’t expect a lower interest rate. The lender decides the interest rate and the terms and conditions. These loans are more or less similar to instant cash loans or other short term loans you take.
Before taking a cash back loan, it is always a good habit to read the terms and conditions and the interest rate applied to the loan. If the interest rate is higher than the average short term loans, the small cashback offered does not make any financial sense to the borrower.
The cash reward programs offered by the lenders are beneficial to both parties. The lender earns money in the form of interest, and the borrower is happy about the lender offering a loan to meet his financial needs and rewarding for the same.