Probate Cash Advances

Explore probate cash advances through zaving and get guidance for accessing estate funds.

Last updated by Zaving Editorial Team, on May 13th, 2024

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What are probate cash advances and how do they work?

Probate cash advances, sometimes known as inheritance advances or probate loans, offer immediate funds to heirs or beneficiaries entitled to an inheritance that is currently held up in the probate process. When someone passes away and leaves behind assets, those assets often need to go through probate court before being distributed to heirs. This process can take time, sometimes several months or even years.

Individuals seeking probate cash advances apply with a specialized funding company, providing details about their expected inheritance and the estate's status. The funding company assesses the case's details, including the estimated inheritance amount and the estate's viability, to determine if an advance is feasible. If approved, the funding company may offer a portion of the expected inheritance upfront.

The repayment structure typically involves the heir repaying the advanced amount, plus fees and interest, once the probate process is complete and they receive their inheritance. Probate cash advances are non-recourse, meaning if there's no inheritance or the estate doesn't yield funds, the beneficiary generally isn't liable to repay the advance.

While probate cash advances provide immediate access to funds, they often come with high fees and interest rates. Individuals considering this option should carefully review the terms, assess other financial alternatives, and consult with legal or financial advisors before proceeding.”

How are cash advances different to payday loans?

Cash advances and payday loans differ significantly:

  • Funding source: Cash advances are linked to credit cards, allowing users to withdraw cash from their credit limit. On the other hand, payday loans are short-term loans provided by specialized lenders, often relying on the borrower's income.
  • Repayment structure: Cash advances are repaid in line with the credit card billing cycle and interest rates, alongside the card balance. In contrast, payday loans mandate a lump-sum repayment, encompassing the borrowed amount, fees, and often higher interest rates, typically due on the borrower's next payday.
  • Interest rates and fees: Cash advances generally carry higher interest rates compared to standard credit card transactions, hovering around 25% to 30% APR. Conversely, payday loans come with notably higher rates, often exceeding 400% APR, combined with additional fees.
  • Regulation: Cash advances fall under the credit card transaction regulations, whereas payday loans are subject to specific state and federal oversight, potentially less stringent than credit card regulations.

These distinctions in funding sources, repayment structures, interest rates, fees, and regulatory oversight underscore the contrast between cash advances and payday loans.”

Can cash advances affect my credit score?

Cash advances themselves typically don't have a direct bearing on your credit score since they're not explicitly reported as separate entries by credit bureaus. However, their implications can indirectly influence your creditworthiness in several ways. Firstly, they contribute to elevating your credit utilization ratio by augmenting your outstanding credit card balance. If this ratio surpasses 30%, it can negatively impact your credit score. Late repayments or defaults on cash advances can result in additional fees and blemishes on your credit report, thereby affecting your score. Additionally, the exorbitant interest rates associated with cash advances can lead to a cycle of debt, making it challenging to manage your finances and, in turn, impacting your credit score indirectly.

It's essential to acknowledge that multiple factors contribute to your credit score, encompassing your overall credit history, payment track record, credit inquiries, and even the interest rates applied to your financial accounts. To mitigate the potential adverse effects of cash advances on your credit score, consider employing some effective strategies. Reserve cash advances exclusively for emergency situations, ensuring prompt repayment to minimize interest accrual and reduce the impact on your credit utilization ratio. Avoid the temptation of frequent cash advances within a short timeframe, as this might signal financial distress and adversely impact your credit score. Moreover, regularly monitoring your credit reports helps in identifying any inaccuracies or discrepancies that could potentially harm your credit score.

By judiciously utilizing cash advances and maintaining a consistent pattern of sound credit practices, you can effectively mitigate their potential negative influence on your credit score.”

More of your frequently asked questions about payday loans

Are there restrictions on how I can use a cash advance?

Cash advances might come with usage restrictions imposed by the lender. These constraints could encompass capped withdrawal amounts, often a percentage of your credit limit, and prohibitions on specific activities like gambling or investments. Opting to use cash advances primarily for immediate financial necessities is recommended due to their higher interest rates.

Can I get a cash advance if I have bad credit?

Yes, it's possible to obtain a cash advance with bad credit, although it might require navigating stricter conditions. Some lenders might consider applicants with poor credit, yet they could enforce stricter terms, lower borrowing limits, or higher fees. Considering alternative lending avenues, such as payday loans, might be feasible, but keep in mind the typically higher costs involved.

Can I pay off a cash advance early without penalties?

Whether you can settle a cash advance early without penalties depends on your lender's terms. While some lenders permit early repayment without penalties, offering you the chance to reduce interest costs by settling the advance ahead of time, others might include clauses for prepayment fees. Reviewing your agreement or contacting your lender directly will clarify if early repayment involves additional charges.

What are the rates and fees associated with cash advances?

Cash advances encompass fees and higher interest rates compared to standard credit card purchases. Typically, an upfront fee of 3-5% of the withdrawal amount is coupled with interest rates ranging from 25-30% APR, depending on your creditworthiness and the lender. These accumulating charges swiftly escalate, making cash advances a costly financial choice.