Same as Cash "Warning"

Be careful when you sign documents allowing you to receive a 12 months "same as cash" loan. Although it could take some time to explain, let me keep this very simple by just saying "same as cash" only equals "same as cash" as long as you pay your loan off in the "same as cash" period.

For example if you sign a 12 month "same as cash" loan make sure it's paid off in 12 months. The reason is simple yet severe. If you don't pay off the loan in the 12 month period, in some cases, the interest not paid during the 12 months will be applied to your loan after the 12 month grace period is over. For example, and to keep the numbers simple, if you were to borrow $2000 at 25% with a 12 months "same as cash" loan and you failed to pay the entire amount of $2000 within the 12 months the 25% would be added to your loan.

Here's a hypothetical situation, but a real one.

John, applies for a $2000 same as cash loan at 25%. John now has one year to pay off the $2000 at no interest so john pays $100 per month for those 12 months. At the end of 12 months, John owes $800. Now at 13 months, or one month after the 12 month grace period has ended there is still a balance owing on the John's loan meaning the loan was not paid in full. This means the "same as cash" terms were not met, so the 25% of the $2000 will now be added to the balance and John will now owes $1300 on his account.

If you have signed a "same as cash" agreement, you may want to check to make sure you are not going to have all the back interest added upon failure to pay off the balance in time. Your other option is to pay off your balance by the end of the grace period.