Cash App is more than just a platform for sending money to friends; it’s also stepping into the lending arena. If you’re in a pinch and searching for “Borrow Money From Cash App,” you’re likely exploring your options for quick financial assistance. This guide breaks down what you need to understand about borrowing money through Cash App, helping you make informed decisions.
Understanding Cash App Loans
Cash App, operated by Block, Inc., through its banking partner, Square Financial Services, Inc., offers a borrowing feature to eligible users. This service provides short-term, closed-end loans directly within the app. It’s designed for users who may need a small amount of money quickly. However, it’s crucial to understand the terms and conditions before you decide to borrow.
Key Loan Terms Explained
Like any financial product, Cash App loans come with specific terms. Here’s a breakdown of the essential definitions you’ll encounter:
- Amount Financed: This is the principal amount of the loan – the actual cash you receive or is credited on your behalf.
- Annual Percentage Rate (APR): The APR represents the yearly cost of borrowing, including fees and interest. It’s a critical figure for comparing loan costs.
- Finance Charge: This is the total dollar amount the loan will cost you, encompassing all fees and interest over the loan term.
- Due Date: The date by which your full loan repayment (Amount Financed plus Finance Charge) is expected.
- Execution Date: The date you officially agree to and finalize the loan agreement, often marked as “Date borrowed” in your Cash App activity.
- Outstanding Balance: The remaining amount you owe on the loan, calculated as the initial Amount Financed plus the Finance Charge, minus any payments you’ve made.
- Outstanding Balance Fee: A potential one-time fee if you fail to repay the Outstanding Balance by the Due Date.
- Overdue Interest: A weekly charge applied to the unpaid Amount Financed if the loan isn’t paid by the Due Date. It’s important to note this is non-compounding interest.
- Payoff Amount: The total sum required to fully settle the loan, including the Outstanding Balance, any Outstanding Balance Fee, and any accrued Overdue Interest.
Credit Reporting and Your Loan
It’s essential to be aware that Square Financial Services may report information about your Cash App loan to credit bureaus. This means your loan activity, including on-time payments, late payments, and defaults, can impact your credit report. Responsible borrowing and timely payments are crucial to maintain a healthy credit score.
If you identify any inaccuracies in your credit report related to your Cash App loan, you have the right to dispute it. You’ll need to send a formal notification to Square Financial Services with detailed information about the disputed item and supporting documentation.
Loan Disbursement: Getting Your Funds
Once you’ve agreed to the loan terms and executed the agreement within the Cash App, the Amount Financed is typically disbursed quickly. The funds are directly deposited into your Cash App Stored Balance, making them readily accessible for your use.
Repaying Your Cash App Loan
Understanding repayment is just as important as getting approved for a loan. Cash App offers a few methods, and it’s vital to know your obligations and options.
Your Promise to Pay
By taking out a Cash App loan, you commit to repaying the Outstanding Balance by the agreed-upon Due Date. You authorize Cash App to automatically debit your Cash App Stored Balance on the Due Date. If your Stored Balance isn’t sufficient, the linked debit card will be used to cover the remaining balance, up to the Outstanding Balance amount. This authorization remains active until your loan is fully repaid.
How Payments Are Applied
During the loan term, your payments are applied proportionally to both the principal loan amount and the finance charges. However, if your loan becomes overdue, the payment application order changes. Overdue payments are first applied to:
- Overdue interest charges
- Outstanding Balance Fees
- Then proportionally to the principal and remaining finance charges.
Prepayment Options: Paying Early
Cash App provides flexibility if you want to pay off your loan early. There are no penalties for prepaying, either in full or in part. In some cases, depending on applicable law, you might even receive a pro-rata refund of a portion of the Finance Charge if you repay before the Due Date.
Cash App offers several optional prepayment plans:
- Weekly Payments: You can choose to make payments in four weekly installments, with the first three being optional.
- Pay as You Go: This optional method allows Cash App to automatically withhold a small percentage (e.g., 10%) of your Cash App inflows and apply it towards your loan balance.
- Manual Repayments: You can make manual payments of any amount on any day during the loan term.
Even if you choose weekly prepayments or Pay as You Go, you always have the option to skip scheduled prepayments and pay the Outstanding Balance in full at any time.
Post-Default Payment Practices
If you fail to pay the Outstanding Balance by the Due Date, you are still obligated to pay immediately. Cash App is authorized to attempt to collect payment from your Cash App Stored Balance and your linked debit card, similar to the standard payment process.
Additionally, Cash App, as the holder of your Stored Balance, is authorized to initiate payments from your balance to cover your loan, up to the amount you owe or the available funds in your account, whichever is less. It’s important to note that this payment authorization does not give Cash App a security interest in your Stored Balance, and they don’t have priority over other creditors in case of bankruptcy.
Accepted Payment Methods
Cash App primarily accepts electronic payments and check payments for loan repayments. Cash payments are not accepted.
Automatic Payments
You can enroll in automatic payments, especially for optional prepayments. This ensures timely payments and can help you avoid late fees or overdue interest. You’ll receive separate Automatic Payment Terms when you enroll. You can typically manage or disable autopay settings within the Cash App loan details section. Disabling autopay will stop future automatic payments, usually within three business days.
Manual Electronic Payments
If you prefer more control, you can make manual electronic payments. Each time you make a payment, you’ll authorize Cash App to debit your linked debit card for the specified amount. Be aware that payment funds might be withdrawn from your bank account as soon as the same day your payment is initiated.
Payment by Check
While less common in the digital age, Cash App also accepts payments via check. Checks should be made payable to “Cash Lending Lockbox Services 208731” and mailed to a specific P.O. Box address in Dallas, Texas. Your check must clearly include your $Cashtag, original Amount Financed, and Execution Date to ensure proper crediting. Checks must be physically received by 4:00 PM CT on a Business Day to be credited on the same day.
It’s crucial to avoid sending checks with restrictive endorsements or accompanying instructions, as these may be rejected or processed without regard to the restrictions. This includes checks marked “Paid in Full” or post-dated checks.
Loan Purpose and Restrictions
Cash App loans are intended for personal, family, or household purposes only. You are explicitly prohibited from using loan proceeds for post-secondary education expenses or business ventures. Furthermore, you cannot use a Cash App loan to repay any existing debt owed to Block, Inc. or its affiliates. These loans are designed as one-time, closed-end credit extensions, subject to credit evaluation.
Fees and Charges: What to Expect
Beyond the Finance Charge and APR, there are additional fees to be aware of:
Outstanding Balance Fee
If you fail to pay your loan by the Due Date and the balance remains unpaid for four days afterward, you may incur a $5 Outstanding Balance Fee. This fee usually applies if you opted for a different payment schedule than initially recommended or if you changed your payment schedule after accepting the loan.
Overdue Interest Charges
Overdue Interest is applied if you miss the Due Date. Starting one week after the Due Date, overdue interest begins accruing weekly on any unpaid Amount Financed. This continues until the loan is fully repaid. It’s a non-compounding interest charge, but it adds to the overall cost of the loan if you’re late on payments.
Staying Informed: Notifications
Cash App will send notifications regarding your loan, payment reminders, and account updates. Ensure these notifications are not filtered out to stay informed. Your payment Due Date remains regardless of whether you receive a notification.
Loan Default: What Happens If You Can’t Repay
Defaulting on your Cash App loan can have several consequences. According to the loan agreement, you may be considered in default if:
- You fail to pay by the Due Date.
- A payment is rejected or cannot be processed.
- You file for bankruptcy or become insolvent.
- You are unable to repay due to death or legal incapacity.
- You provide false or misleading information.
- Your Cash App account is restricted or terminated.
- You violate any term of the Loan Agreement.
- You permanently reside outside the United States.
In case of default, Cash App may take actions such as:
- Debiting your Cash App balance or linked card for the Outstanding Balance.
- Suspending your ability to use certain Cash App features until repayment.
- Charging Overdue Interest.
- Preventing you from taking out future Cash App loans.
- Taking other actions as permitted by law.
Important Considerations Before Borrowing
Before you “borrow money from cash app,” consider these crucial points:
- Loan Purpose: Ensure you’re borrowing for a permissible personal, family, or household need.
- Repayment Ability: Carefully assess your ability to repay the loan on time to avoid fees and negative credit reporting.
- APR and Fees: Understand the total cost of borrowing, including the APR, Finance Charge, and potential fees.
- Alternatives: Explore other options like personal loans, credit cards, or lines of credit to compare terms and costs.
- Terms and Conditions: Read the full Loan Agreement carefully to be fully aware of your obligations and rights.
Conclusion
Borrowing money from Cash App can be a convenient solution for short-term financial needs for eligible users. However, it’s essential to fully understand the terms, repayment obligations, and potential consequences of default. By being informed and responsible, you can utilize Cash App’s borrowing feature effectively while maintaining your financial health. Always prioritize timely repayment and consider if a Cash App loan aligns with your overall financial strategy.
