Cash App has evolved from a simple peer-to-peer payment platform into a versatile financial tool, offering features like investing, Bitcoin trading, and even borrowing money. If you’re looking for a short-term loan and are a Cash App user, you might be wondering, “How Do You Borrow Money From Cash App?”. This guide will walk you through the process, terms, and important considerations of borrowing money directly within the Cash App.
Understanding Cash App Borrow: Is It a Loan?
It’s crucial to understand that when you “borrow” money from Cash App, you are actually taking out a short-term, closed-end loan provided by First Electronic Bank. This isn’t simply accessing funds from Cash App itself, but entering into a formal loan agreement. This means there are terms and conditions, interest (in the form of a finance charge), and a repayment schedule you need to adhere to.
Who Can Borrow Money from Cash App? Eligibility and Requirements
While Cash App aims to make financial services accessible, borrowing money is not available to all users. Eligibility is determined by Cash App based on several factors. Although the exact criteria are not publicly disclosed in detail, based on the loan agreement terms, here are key aspects that likely influence your eligibility:
- Active Cash App User with Account in Good Standing: You need to be a regular user of Cash App with an active account that is in good standing. This likely means having a verified account and a history of responsible usage.
- Residency in an Eligible State: Cash App loans are not available in all states. The loan agreement mentions that if you move to a state where they don’t offer loans, you will be unable to borrow subsequent loans. Availability varies, so you’ll need to check within the app if the borrow feature is offered in your state.
- Age of Majority: You must be at least 18 years old, or the age of majority in your state, and legally capable of entering into a contract.
- US Residency: You need to be a resident of the United States when you take out the loan.
- Credit History: Cash App, through First Electronic Bank, is authorized to obtain your credit reports from credit reporting agencies. This is used to assess your creditworthiness and make loan decisions. Submitting a loan application or accepting a loan may result in an inquiry on your credit report, which could potentially affect your credit score.
- Personal, Family, or Household Purposes: The loan is intended for personal, family, or household purposes only. You cannot use Cash App borrow for business or postsecondary educational expenses.
How to Check if You’re Eligible to Borrow:
The best way to check if you are eligible to borrow money from Cash App is directly within the app. Look for the “Borrow” feature in your Cash App interface. If you see it, you can proceed with the application process to see the terms offered to you. If you don’t see the “Borrow” option, it likely means you are not currently eligible based on their criteria.
Understanding the Loan Terms: Amounts, Finance Charges, and APR
If you are eligible to borrow, it’s vital to understand the terms associated with a Cash App loan. These are clearly outlined in the “Summary of Loan Terms” you will receive before accepting the loan. Key terms to pay attention to include:
- Borrowed Amount (Amount Financed): This is the principal amount of money you are actually borrowing. Cash App sets limits on how much you can borrow, and this limit may vary per user based on their internal assessment.
- Finance Charge: This is the cost of borrowing the money. It’s a one-time fee calculated as a percentage of your Borrowed Amount. Unlike traditional interest that accrues over time on an outstanding balance, the Finance Charge for a Cash App loan is fixed and non-refundable, even if you repay early.
- Annual Percentage Rate (APR): The APR represents the total cost of your loan as a yearly rate. It includes the Finance Charge and reflects the true cost of borrowing. The APR will be detailed in your “Summary of Loan Terms”.
- Due Date (Final Due Date): This is the date by which you must repay the Borrowed Amount plus the Finance Charge in one lump sum. Cash App loans are short-term, so the Due Date will be relatively soon after you borrow.
- Overdue Interest: If you fail to repay the Payoff Amount (Borrowed Amount + Finance Charge) by the Due Date, you will incur Overdue Interest. This interest accrues weekly on the unpaid Borrowed Amount until the loan is paid off. The specific Overdue Interest rate will be in your loan terms.
- Payoff Amount: This is the total amount you need to repay to fully satisfy your loan obligation. It includes the Outstanding Balance (Borrowed Amount + Finance Charge minus any payments) plus any accrued Overdue Interest.
Example:
Let’s say you borrow $200 with a Finance Charge of $10 and a Due Date in four weeks.
- Borrowed Amount: $200
- Finance Charge: $10
- APR: (This will be calculated and disclosed in your loan terms)
- Due Date: Four weeks from borrowing
- Initial Payoff Amount: $210 (if paid on or before the Due Date)
If you miss the Due Date, Overdue Interest will start accruing on the $200 Borrowed Amount weekly, increasing your Payoff Amount over time.
Step-by-Step: How to Borrow Money on Cash App (If Eligible)
While the availability and exact interface may slightly change, the general process to borrow money from Cash App, if you are eligible, typically involves these steps:
- Open Cash App: Launch the Cash App application on your mobile device.
- Check for “Borrow” Feature: Look for the “Borrow” option on the Cash App home screen, often found in the banking or balance section. If you don’t see it, the feature might not be available to you currently.
- Explore Borrow Options (If Available): If you see “Borrow,” tap on it. Cash App will likely present you with information about the borrow feature, including the potential borrowing amount you are eligible for and the associated fees.
- Review Loan Terms: Carefully review the “Summary of Loan Terms”. This document is crucial and will detail:
- Your Borrowed Amount
- The Finance Charge
- The APR
- The Due Date
- Overdue Interest details
- Repayment schedule (usually a single lump sum)
- Other important terms and conditions
- Accept the Loan Agreement: If you agree with the terms, you will need to formally accept the Loan Agreement, likely through an electronic signature process within the app. Ensure you read and understand all aspects of the agreement before accepting.
- Funds Disbursed: Once you accept the agreement, the Borrowed Amount, minus the Finance Charge (which is withheld upfront), will be disbursed to your Cash App balance, typically very quickly.
Important Note: The loan agreement explicitly states “You agree that Bank will withhold the Finance Charge and disburse the Borrowed Amount to Your loan account.” This means the Finance Charge is deducted from the loan amount before it’s deposited into your Cash App balance. For example, if you borrow $200 with a $10 Finance Charge, you will receive $190 in your Cash App balance. However, you are still obligated to repay the full Borrowed Amount of $200 plus the $10 Finance Charge, totaling $210 by the Due Date (initially).
Repaying Your Cash App Loan: Methods and Options
Cash App offers a few ways to repay your loan. Understanding your repayment options is essential to avoid late payments and Overdue Interest:
- Automatic Payment (Optional): You can choose to enroll in automatic payments during the application process. This allows Cash App to automatically debit your linked bank account or Cash App balance on the Due Date for the full Payoff Amount. You can opt-out of automatic payments by contacting Cash App support.
- Manual Electronic Payments: You can make manual electronic payments at any time before or on the Due Date through the Cash App. This typically involves using a debit card linked to your Cash App account to make a payment.
- Payment by Mail (Check): While less convenient and slower, you can also send a check payable to “Cash Lending” to a specific address provided in the loan agreement. Checks must be physically received by a certain time on a Business Day to be credited on the same day. Your check must include your Cashtag, original Borrowed Amount, and original borrow date to be properly processed.
Prepayment:
Cash App allows you to prepay your loan in full or in part at any time without any prepayment penalty. However, remember that the Finance Charge is non-refundable and fully earned when the Borrowed Amount is disbursed. So, even if you pay off your loan early, you will still pay the full Finance Charge.
What Happens if You Don’t Repay Your Cash App Loan? Default and Consequences
Failing to repay your Cash App loan by the Due Date can lead to several negative consequences, as outlined in the loan agreement’s “Default” section:
-
Default Conditions: You will be in default if:
- You don’t make the full payment by the Due Date.
- A payment you make is rejected by your bank.
- You file for bankruptcy.
- You provide inaccurate or false information.
- You violate any term of the loan agreement.
- You move permanently outside the United States.
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Consequences of Default:
- Overdue Interest: As mentioned, Overdue Interest will begin accruing weekly on the unpaid Borrowed Amount, increasing your total debt.
- Debit of Cash App Balance or Linked Debit Card: If you are enrolled in automatic payments, Cash App may attempt to debit your Cash App Stored Balance or linked debit card for the overdue amount.
- Debit of Cash App Balance After 90 Days of Default: If your loan remains in default for more than 90 days, Cash App may debit the full Payoff Amount from your Cash App Stored Balance, potentially causing a negative balance. Any funds you subsequently receive into your Cash App (from peer-to-peer payments, direct deposits, etc.) may be used to offset this negative balance. While you have a negative balance, your Cash Card may be unusable.
- Suspension of Cash App Features: Your ability to use certain or all features within Cash App may be suspended until you fulfill your loan obligation.
- Credit Reporting: Late payments and defaults may be reported to credit bureaus, negatively impacting your credit score. The loan agreement states that “Late payments, missed payments, or other defaults on Your account may be reflected in Your credit report.”
- Collection Activities: While not explicitly detailed in this agreement extract, it’s implied that Cash App or their agents may take further collection actions to recover the debt, as they reserve the right to “any other action to the extent not prohibited by law”.
Avoiding Default:
The best way to avoid these consequences is to prioritize repaying your Cash App loan on time. Utilize reminders, consider setting up automatic payments if you are comfortable, and ensure you understand your Due Date and Payoff Amount. If you anticipate difficulty in repayment, contact Cash App support as soon as possible to explore any potential options.
Important Legal and Regulatory Information
The Cash App Borrow Loan Agreement includes several legal clauses, some key ones to be aware of include:
- Governing Law and Arbitration: The agreement is governed by Utah law and federal law. It also contains a binding individual arbitration clause, meaning that disputes (excluding certain exceptions like small claims court actions and disputes about the arbitration clause itself) must be resolved through arbitration rather than court lawsuits. This means you waive your right to a jury trial for covered disputes.
- Military Annual Percentage Rate (MAPR): The agreement includes a Military Annual Percentage Rate statement providing important protections to members of the Armed Forces and their dependents, limiting the cost of credit to a maximum APR of 36%.
- State Notices: The agreement includes specific notices for residents of certain states (California, Iowa, Kansas, Massachusetts, Missouri, New Jersey, New York, Rhode Island, Vermont, Ohio, Washington, Utah, Wisconsin), covering aspects like credit reporting, consumer rights, and marital property laws.
It is highly recommended to read the complete Loan Agreement and Summary of Loan Terms provided by Cash App carefully before borrowing. Understand your obligations, the costs involved, and the consequences of non-repayment.
Conclusion: Borrowing Money Responsibly with Cash App
Cash App Borrow can be a convenient option for short-term financial needs for eligible users. However, it’s crucial to approach it responsibly. Understand that borrowing from Cash App is taking out a loan with associated costs (Finance Charge and potentially Overdue Interest). Carefully evaluate your need to borrow, your ability to repay by the Due Date, and the terms of the loan before proceeding. By understanding the process, terms, and potential consequences, you can make an informed decision about using Cash App Borrow and manage your finances effectively.
