Cash Generator Loans
Before you apply for a cash generator loan in store or online, read the essential tips from our guide.
What is a cash generator or cash converter loan?
Cash generator and converter loans are loans given in exchange for possession of an item. The item will be worth considerably more than the money loaned, and if the loan is not repaid as agreed, the item becomes the permanent property of the lender – usually a store from which the item would be sold to recoup the cost of the money loaned. If you don’t want to repay the loan, you can simply sell the item to the shop – but you will get only a fraction of what you originally paid for the item. This kind of business is sometimes called a pawn shop.
Top providers include:
There are seldom any credit checks associated with loans of this type, as the risk is mitigated by the item left on deposit. In other words, if the shop doesn’t get the money back, it can sell the item and make even more, so the risks are small. This means that you can get a small loan even if you have poor credit history, are self-employed, or have no employment at all.
Shops like this will only take items that are not under finance – you can’t still owe money on them – and you’ll need to be 18 years of age or older. You also need to be the legal owner of the goods, or have the legal owner take out the loan on your behalf.
There are options to get loans online as well, often without any goods needed as collateral. These are called Cash Converter Loans.
Summary of this loan:
Cash converter loans allow successful applicants to borrow amounts ranging from £50 to £1,000, depending on your income, credit rating and other factors. The payment periods are usually from three months to a year. The applications are pretty simple, and the time from application to money in the bank can be as quick as the same day, or can take several days if additional checks and verifications are needed.
The downside is that rates are quite high, so this is an option of last resort for most people. There can also be additional fees for administration, and hefty penalties for late or missed payments.
How do cash generator loans work?
You start by deciding how much you need to borrow, and how long you will need to pay it back. Be sure to include fees and interest in your considerations. You then filling an online application and the lender will do the credit check and any additional checks they may need. You’ll usually know if you have been successful within 24 hours, and receive an offer. If you accept the offer, the funds can be in your bank the following day.
This kind of loan often includes a Continuous Payment Authority agreement. This means that the lender will be able to take money from your account on a regular basis, without further permission from you. They can legally take payments whenever they wish, and for varying amounts without consulting you. If you use a regulated lender, this power is unlikely to be abused, but if you feel you are being treated unfairly or not in accordance with your agreement, you can cancel the CPA agreement at any time by contacting the lender or your bank.
Keep in mind, doing so may negate your loan agreement, at which point the full outstanding amount may become due.
Are you eligible for a cash generator loan?
You need to be a UK citizen of at least 18 years of age, have a UK bank account and credit card, and provide proof of ID and address.
What are the risks with a short term loan like this?
If you really need money that you don’t currently have, then a short-term loan may be a solution for you. They are normally designed to help people bridge a period of time between the need for money, and a time when money is due to come in.
If you have no known way to repay a loan, it is not a good idea to take one, even if a lender is willing. The resulting fees and penalties, accrual of interest and other costs would put you in a much worse situation than before you took out the loan.
Short-term loans are expensive, so if you are able to save up to meet an expense of to make a desired purchase, that is usually the best way to go.