What You Should Know About Money Borrowing Apps

We all run into situations where we may need to borrow money in a pinch. Maybe your debt got a little out of control, and you need to consolidate. Maybe you're working on building an emergency fund, but it's not big enough to cover a sudden car repair. These are times when you need money now. 

Fortunately, numerous money borrowing apps are available for iOS and Android that give you access to fast cash when needed. Whether it's to pay off debt or pay for an emergency, these money borrowing apps can help. 

Below, we cover the main types of borrowing apps, the pitfalls to look out for, and a few quality apps to consider. 

Types of money borrowing apps

There are two main types of money borrowing apps: cash advance apps and debt consolidation apps. While they have distinct differences, many of these apps have the same purpose of helping you get through rough financial patches. 

Here's how these two types of money lending apps work. 

Cash advance apps

Cash advance apps offer payday loans to help you get through an immediate short-term financial tight spot by lending you money against your next paycheck. These apps will generally offer you a small loan of a few hundred dollars to help you pay bills, pay for a car repair, avoid overdraft fees or simply make ends meet until your next payday. 

These loans often offer instant cash in your checking or savings account or make the deposit within a business day, allowing you to handle time-sensitive expenses. 

Once you get your next paycheck, the app automatically withdraws the loan amount, plus any interest and fees you agreed to. Some of these apps are interest-free but will charge you a monthly fee or a tip instead.

Many of these loan apps also offer these short-term loans without a credit check, making them ideal for people with bad credit or no credit at all. And because they don't check your credit, these payday advances have no impact on your credit score unless you default and the account goes into collections. The downside is your payments aren't reported to the credit bureaus, so these loans often won't help build credit. 

Debt consolidation apps

Debt consolidation apps, sometimes called debt repayment apps, offer longer-term and larger personal loans or lines of credit to help their users consolidate credit card debt, lower their interest rates and get out of debt sooner.

These apps offer much larger loans than cash advance apps, as some offer thousands of dollars to pay off credit cards and other high-interest debt. Because they have higher loan amounts, these lenders often do a hard credit check at some point during the qualifying process. However, they often determine eligibility and show you estimated loan terms from just a soft credit check. 

Some debt repayment mobile apps, such as Tally, pay off your credit card debt directly and manage the payments through the mobile app. Others will direct deposit the loan amount into your checking account, allowing you to pay off the debts yourself. 

What to watch out for when choosing a money borrowing app

No matter what type of money borrowing app you're looking to use, there are several things to watch out for when choosing one. 

High interest rates 

The payday advance industry has gotten bad press over its predatory lending practices, including extremely high interest rates. While the apps have helped calm this a bit by bringing more competition to the market, you must still watch out for a company trying to sneak in a high interest rate. 

When shopping for either a cash advance app or a debt repayment app, always check the interest rate. Some companies will stretch a loan out longer to make the monthly payment smaller but increase the interest rate, meaning it'll cost you more over the life of the loan. 

Origination fees

A common fee among lenders is the origination fee. This is the fee the lender charges just for creating the loan. This is usually either added to the loan amount or deducted from the loan proceeds. 

For example, if you take out a $1,000 loan with a $100 origination fee, and the lender adds the fee to your loan, you'd have a $1,100 loan to pay off. If the lender deducts it from the proceeds, you will receive only $900 of the $1,000 loan. 

While there's nothing wrong with a company charging an origination fee, it is something to consider when comparing loan options. One company may have a higher interest rate than another, but the lower-interest loan option may have an origination fee that makes the total loan cost higher. 

Monthly membership fees

Some cash advance apps offer low- or no-interest cash advances, making them seem like a great option. However, they may charge you a monthly subscription fee instead, which essentially amounts to an interest charge. 

Again, this isn't a shady tactic. It's simply something to consider when looking at loan options. If one loan option has interest and another doesn't but charges a monthly fee, compare the interest you'll pay to the monthly fee to see which is the more economical option. 

Other fees

When considering money borrowing apps, read the fees carefully, as they may sneak in other charges you wouldn't expect. These can include payment fees, transfer fees, underwriter fees and more. 

Again, there is nothing illegitimate about these fees. You simply want to be aware of them and consider them when comparing your loan options. 

Money borrowing apps to consider

There's no shortage of money borrowing apps to consider, but some stand out more than others with their features, low rates and other standout offerings. 

Earnin

Earnin is a unique payday advance app that allows users to borrow $100 to $500 until their next payday. There are a few catches, though. First, Earnin is marketed as an app that pays you immediately for the work you do, so you must have an electronic timecard to share or a physical office you work in that the app's GPS can track. If you're a gig worker, you can upload pictures of your task receipts, like an Uber order or Postmates delivery confirmation, as evidence of pay owed to you. 

Earnin offers its cash advance services with no mandatory fees if you qualify. There is only an optional tip you can give. It also has an optional Balance Shield Cash Out that monitors your bank account and automatically deposits up to $100 if your balance falls below $100. Balance Shield Cash Out's automatic deposit is free to use once, but any subsequent automatic deposits require at least a $1.50 tip. 

Dave

Dave is another paycheck advance app that doesn’t charge interest. Instead, it charges users a $1 monthly fee for its spending account, which is where you can receive payday advances and transfer them to your bank account or use the Dave debit card to access. 

On top of its $1 subscription fee, Dave also has a $1.99 to $5.99 express fee, which gets your funds to you within eight hours instead of the usual 1 to 3 days. The 1 to 3 day transfer is free. You also can have the option to tip up to 20% of the amount you borrow. 

MoneyLion

MoneyLion is a financial services company offering a range of options in its mobile app. Once you sign up for its mobile bank account, you're eligible for Instacash. With Instacash, you can get up to a $250 payday advance at 0% APR without a credit check. 

There are no mandatory fees on Instacash, but MoneyLion will ask for an optional tip. It takes 12 to 48 hours to get the cash deposited into your MoneyLion account. If you want the cash in an external account, it'll take 3-5 business days. Depending on the amount and destination account, you can get the cash faster by paying a Turbo Fee, which ranges from 99 cents to $7.99. 

MoneyLion also offers a credit builder program that gives access to loans of up to $1,000 and reports your on-time payments to all three credit bureaus. The downside is this program costs $19.99 per month, but it includes special cash-back offers that allow you to recoup some of this expense. 

Tally

Tally† is a credit card repayment app that helps users manage their credit cards in one place, get personalized payoff strategies, and set up automatic credit card payments so you avoid late fees by offering a lower-interest line of credit. For those looking to expedite their debt payoff, consider the Tally+ line of credit. 

The Tally+ line of credit often has a lower interest rate than your credit cards — 7.90% to 29.99% APR — so you can use it to pay off high-interest cards and reduce your rates. Plus, since it's a line of credit, you can use Tally+ more than once. 

On top of all this, you make only one payment to Tally every month, and the app will pay all your credit cards, even those not consolidated with the line of credit. 

Tally does charge an annual fee ranging from $0-$300, but this fee comes from your line of credit, not out of pocket. 

Money borrowing apps can help with emergencies or debt

No matter what you need money for, an emergency or consolidating debt, these money borrowing apps, when used correctly, can be a big help. Remember to use them only as needed and not as a way to spend more money than you earn. 

If debt repayment is your main focus, we recommend considering the Tally credit card repayment app. Our app helps you manage your credit card payments and offers a lower-interest personal line of credit, allowing you to efficiently pay off higher-interest credit cards. 

†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) will be between 7.90% and 29.99% per year and will be based on your credit history. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 to $300.